A stochastic competitive R&D race where "winner takes all"

Pelin G. Canbolat, Boaz Golany, Inbal Mund, Uriel G. Rothblum

Research output: Contribution to journalArticlepeer-review


The paper considers a race among multiple firms that compete over the development of a product. The first firm to complete the development gains a reward, whereas the other firms gain nothing. Each firm decides how much to invest in developing the product, and the time it completes the development is a random variable that depends on the investment level. The paper provides a method for explicitly computing a unique Nash equilibrium, parametrically in the interest rate; for a given interest rate, the Nash equilibrium is determined in time that is linear in the number of firms. The structure of the solution yields insights about the behavior of the participants. Furthermore, an explicit expression for a unique globally optimal solution is obtained and compared to the unique Nash equilibrium.

Original languageEnglish
Pages (from-to)700-715
Number of pages16
JournalOperations Research
Issue number3
StatePublished - May 2012

All Science Journal Classification (ASJC) codes

  • Computer Science Applications
  • Management Science and Operations Research


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