Optimal Design of Peer Review

The aim of this research is to analyse peer review from the perspective of economic theory, to find reasons for its existence, and to find its possible improvements. Peer review is under increasing stress, as the growth of publishing is placing a burden on the entire academic enterprise. The literature has identified two main problems here. Firstly there is growing inefficiency during the peer reviewing process. The inefficiency has a number of sources: papers are often being reviewed multiple times; authors are doing too much revising to appease incompetent referees, with considerable effort input but without much value added. Moreover, the inefficiency of the refereeing process also causes inefficiency in researching process, for instance, researchers prefer to do small unimportant projects rather than few very important ones due to too noisy refereeing. Secondly, the peer reviewing process is experiencing a lack of fairness: "reviewers' recommendations are frequently biased, that is, judgments are not based solely on scientific merit, but are also influenced by personal attributes of the authors, applicants, or the reviewers themselves." (Bornmann 2011). Therefore, the question of how to design a better peer reviewing system is very important. Research is important for economic growth, and peer review is fundamental to research progress. Big societal problems, like global warming, pandemics, dementia, and financial crises are going to be solved with substantial input from academic research. If academic institutions are poorly designed, then societies' ability to solve big problems would be seriously hampered. Peer reviewing, as a critical step of research progress, deserves more attention and research effort.