We develop a theory of the rent distribution and stability of innovative firms. Our theory is based on a model of bargaining over new ideas. The model accounts for the problem of information leakage, namely, the diffusion of information about new ideas among the agents that participate in the...

We address the problem faced by innovators who have an idea for a marketable product but must hire employees to bring the product to the market. Information leakage implies that newly-hired employees become informed of the idea and may attempt to bring the product to the market themselves. We...

In this Paper we analyse the effects of information leakage on the incentives to innovate in firms. We analyse a situation in which an employee in a firm is inspired with a new idea for a product. In a framework in which Intellectual Property Rights on ideas are absent, we analyse the...

We model an individual who wants to learn about a state of the world. The individual has a prior belief and has data that consist of multiple forecasts about the state of the world. Our key assumption is that the decision maker identifies explanations that could have generated this data and...

In this paper we question the common wisdom that more polarized voters’ opinions imply larger policy polarization. We analyze a voting model in which the source of the polarization in voters’ opinions is “correlation neglect”, that is, voters neglect the correlation in their information...

In this paper we examine the long term effects of socialization and segregation in schools, on labour market outcomes. We incorporate a model of “informational” peer influence by which beliefs of pupils are affected by exposure to other pupils’ posterior beliefs. Specifically, we focus on...