Negative Results in Science: Blessing or (Winner's) Curse?

Two players receiving independent signals on a risky project with common value compete to be the first to innovate. We characterize the equilibrium of this preemption game as the publicity of signals varies. Private signals create a winner's curse: investing first implies that the rival has abstained from investing, possibly because he has privately received adverse information about the project. Since players want to gather more evidence in support of the project as a compensation, they invest later when signals are more likely to be private. Because of preemption, the NPV of investment is zero at equilibrium regardless of the publicity of signals. However, for a conservative planner who cares about avoiding unprofitable investments, this implies that investment arises too early at equilibrium, and such a planner then prefers signals to be private. This provides a rationale against the mandatory disclosure of negative results in science, notably when competition is severe. Our results suggest that policy interventions should primarily tackle winner-takes-all competition, and regulate transparency only once competition is sufficiently mild.