Academics and corporate innovators both spend their workdays pursuing breakthroughs that may never materialize. Venturing into unknown territory carries fairly high potential rewards, but also a fairly high risk of failure.

When working on a research project, it can be difficult to decide when to cut your losses. Optimism tells us that just beyond our grasp hovers the solution that will make it all work; pessimism, on the other hand, tells us that the end we have in sight may well be a dead end. We are always aware that every day spent chasing a mirage wastes valuable time and resources. Absent a glaring signpost of failure, how does one know when it makes strategic sense to abandon an idea?

Our new paper in Operations Research helps answer this question systematically. (See an earlier version of this research.) Although uncertainty is a given in any speculative project, the good news is that we can still base our decisions on something more solid than guesswork and intuition.

 …