Which discoveries improve decision making? Which question does a researcher pursue? How likely will a researcher discover an answer? We propose a model in which  the answers to research questions are correlated. Revealing an answerendogenously improves conjectures on unanswered questions. A decision maker uses conjectures to address problems. We derive the benefits of a discovery on decision making. A researcher maximizes the benefits of discovery net the cost of research. We characterize the researcher's optimal choice of research question and research effort. Benefits and cost of research crucially depend on the structure of pre-existing knowledge. We find that discoveries are rare but advance knowledge beyond the frontier if existing knowledge is dense. Otherwise, discoveries are more likely and improve conjectures inside the frontier .
Is more novelty in research desirable? We develop a model in which knowledge shapes society's policies and guides the search for discoveries. Researchers select which question to study and to what extent. The novelty of the question determines both the value and the difficulty of discovering its answer. We show that the benefits of discoveries are non-monotone in novelty. Nevertheless, due to a dynamic externality, it can be optimal to incentivize research on distant discoveries to improve the evolution of knowledge. One reason is that the probability of a discovery and the novelty of the question are endogenously linked. They can be complements or substitutes depending on existing knowledge. We analyze cost reductions and research awards as instruments to incentivize research. While a benefit-maximizing funder's optimal funding mix depends on her budget in general, distant discoveries can only be incentivized through awards .
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Which discoveries improve decision making? Which question does a researcher pursue? How likely will a researcher discover an answer? We propose
Is more novelty in research desirable? We develop
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knowledge shapes society's policies and guides the search for discoveries. Researchers select which question to study and to what extent. The novelty of the question determines both the value and the difficulty of discovering its answer. We show that
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answers to research questions are correlated. Revealing an answerendogenously improves conjectures on unanswered questions. A decision maker uses conjectures to address problems. We derive the
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a discovery on decision making. A researcher maximizes the benefits of discovery net the cost of research. We characterize the researcher's optimal choice of research question and research effort. Benefits and cost of research crucially depend on the structure of pre-existing
discoveries are non-monotone in novelty. Nevertheless, due to a dynamic externality, it can be optimal to incentivize research on distant discoveries to improve the evolution of knowledge. One reason is that the probability of a discovery and the novelty of the question are endogenously linked. They can be complements or substitutes depending on existing
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find that discoveries are rare but advance knowledge beyond the frontier if existing knowledge is dense. Otherwise, discoveries are more likely and improve conjectures inside the frontier
analyze cost reductions and research awards as instruments to incentivize research. While a benefit-maximizing funder's optimal funding mix depends on her budget in general, distant discoveries can only be incentivized through awards