Essays on the Production of Ideas

Abstract

Old ideas serve as critical inputs in the production of new ideas. In order to generate knowledge, innovators “stand on the shoulders of giants,” the great thinkers who came before, whose ideas serve as the foundation to build on. In this dissertation, I rely on rich empirical data in biomedical settings to identify factors that drive or hinder this cumulative process of knowledge production. The first essay focuses on how knowledge workers innovate in new domains without giants, where there are only few existing ideas to build on. Using the setting of structural biology, I explore how a new technological tool—the automation of analogical reasoning—allowed innovators to import knowledge from an adjacent domain, bypassing the need to build knowledge from the ground up. In the second essay, I turn to how institutions can shape innovative outcomes, particularly when the shoulders of giants rest on a weak foundation. I document that poor communication among different institutional parties of the patent system likely led to the prevalence of biomedical patents based on erroneous or fraudulent science, reducing incentives for innovation. Finally, in the third essay, I highlight the role of private sector polices—specifically, insurance design—in steering the direction of firms’ R&D efforts in drug development.