The Novelty Paradox & Bias for Normal Science: Evidence from Randomized Medical Grant Proposal Evaluations

Central to any innovation process is the evaluation of proposed projects and allocation of resources. We investigate whether novel research projects, those deviating from existing research paradigms, are treated with a negative bias in expert evaluations. We analyze the results of a peer review process for medical research grant proposals at a leading medical research university, in which we recruited 142 expert university faculty members to evaluate 150 submissions, resulting in 2,130 randomly assigned proposal-evaluator pair observations. Our results confirm a systematic penalty for novel proposals; a standard deviation increase in novelty drops the expected rank of a proposal by 4.5 percentile points. This discounting is robust to various controls for unobserved proposal quality and alternative explanations. Additional tests suggest information effects rather than strategic effects account for the novelty penalty. Only a minority of the novelty penalty could be related to perceptions of lesser feasibility of novel proposals.

Policy implications 
Peer evaluators' proclivity to reject proposals for novel projects means that the greater diversity of experimental design and discovery are curtailed.
Boudreau, K. J., & Guinan, E. C., Lakhani, K. R., & Riedl, C., 2012. 'The Novelty Paradox and Bias for Normal Science: Evidence from Randomized Medical Grant Proposal Evaluations'. Harvard Business School Technology & Operations Mgt. Unit Working Papers, SSRN.