Loot boxes are a primary source of revenue in video game industry. Loot boxes randomly drop items of differing value. To design a loot box, sellers choose the purchase price and drop rates. We show that, in general, the loot box design problem is NP-hard. By restricting the form of player utilities, we can solve the problem exactly in polynomial time when the number of items is fixed. Under different restrictions, we solve the problem approximately in polynomial time with fixed precision.

The degree of modularity embodied by a system overall architecture has clearly received quite some attention in the product/service literature but there has been much less theory established to specifically guide the incentive design for the development of a modular system within an organization. We seek to understand how the product architecture and the sources of uncertainty that affect the value interdependences of such a system, influence the optimal design of individual and team incentives.

In innovation contests, organizers seek solutions from solvers individually or as teams. High-novelty, nondecomposable problems benefit organizers with team submissions despite lower solver efforts. For low-novelty, nondecomposable problems, teams may not benefit organizers. Decomposable problems have specific conditions for organizer benefits. Contests favor team collaboration over in-house innovation. Solvers benefit from teams when novelty is moderate.