Using Bayesian Model to Analyze the Efficient Allocation of Research Funds

Using Bayesian model, we explore the efficient allocation of research funds. With the theory of standard and all-pay auctions, we obtain the applicant’s equilibrium payout and the committee’s expected return in a symmetric independent private value and asymmetric independent private value model. Moreover, we compare two different evaluated manners. We obtain that applicants will be more aggressive when the committee valuates by the research plans than by the research results, but both situations give the same effect to the committee in a symmetric independent private value model. However, when applicants are asymmetrical, the committee will prefer allocating research plans to research results. Finally, we analyze applicant’s equilibrium payout when the award the winner gets is related to the applicant’s value of research plans or results.