A couple of years ago, we published a PNAS paper that tackles the researchers' side of the story, explaining why grant review panels may be unlikely to fund risky studies.

https://www.pnas.org/doi/10.1073/pnas.2111615118

The present paper addresses the funding agencies' side, and looks at why researchers may be reluctant to take on high-risk projects even if they are funded.

To get at this, we have think about the incentives that academic researchers face.

Because it's very difficult to monitor the effort that researchers put in, academic scientists are rewarded almost exclusively for their research output.

Rewards come in the form of jobs, promotions, salary, and prestige, for example. We'll refer to these all as wages.

Researchers might be willing to take on risky projects if they could be insured against that risk, with wages that didn't depend on the vicissitudes of scientific fortune.

But you can't completely ensure against the failure to get results, because bad luck is indistinguishable from loafing and you need to somehow incentivize effort.

A social planner might induce effort and risk by paying large bonuses for major results.

But given any budget to allocate among researchers, this is inefficient from the researchers' perspective because risk aversion means that to increase the utility of a high earner even modestly, you have to take a lot of wages away from low earners at high utility cost.

But here's the thing: science has no external social planner.

Scientists themselves determine what results are considered worthwhile, and how worthwhile. They decide who is hired, promoted, given wages, is awarded prizes, and garners esteem. In other words, they set their own wages, of course subject to a budget constraint.