We discuss the literatures on behavioral economics, bounded rationality and experimental economics as they apply to firm behaviour in markets. Topics discussed include the impact of imitative and satisficing behavior by firms, outcomes when managers care about their position relative to peers,...

Within the policy debate, there is a fear that large incumbent firms buy small firms' inventions to ensure that they are not used in the market. We show that such "acquisitions for sleep" can occur if and only if the quality of a process invention is small; otherwise, the entry profit will be...

We develop a theory of innovation for entry and sale into oligopoly, and show that inventions of higher quality are more likely to be sold (or licensed) to an incumbent due to strategic product market effects on the sales price. Such preemptive acquisitions by incumbents are shown to stimulate...

This paper examines the adoption of Artificial Intelligence (AI) among German firms, leveraging firm-level data from the ifo Business Survey. We analyze the diffusion of AI across sectors and firm sizes, showing a significant increase in AI usage from 2023 to 2024, particularly in manufacturing...

Within the policy debate, there is a fear that large incumbent firms buy small firms' inventions to ensure that they are not used in the market. We show that such "acquisitions for sleep" can occur if and only if the quality of a process invention is small; otherwise, the entry profit will be...

We analyze the effects of optimism and overconfidence when the manager's compensation package includes severance pay and the CEO has bargaining power. We find that optimism does not affect incentive pay but increases severance pay with a negative effect on profit. Overconfidence, on the...

We construct a novel data set to show that, between 2003-2020, up to one-fifth of America's largest firms had a non-financial blockholder or insider as their largest shareholder. Blockholders and insiders tend to be less diversified than institutional investors. Measures of "universal" and...

This study investigates boards of (non-executive) directors and whether employee representation has a positive effect on gender diversity on boards. We exploit rich, newly assembled board–director matched panel data for Norway and Germany, which contain unique information on whether a director...

We examine the incentives and implications of supplier encroachment, when final good produc-tion requires the use of multiple complementary inputs and the entry of a supplier into the final good market gives rise to mutual outsourcing of inputs between the encroaching supplier and the incumbent....

Digital platforms, empowered by artificial intelligence algorithms, facilitate efficient interactions between consumers and merchants that allow the collection of profiling information which drives innovation and welfare. Private incentives, however, lead to information asymmetries resulting in...