Many basic economic theories with perfectly functioning markets do not predict the existence of the vast number of microenterprises readily observed across the world. We put forward a model that illuminates why financial and managerial capital constraints may impede experimentation, and thus...

We show how financial and managerial constraints impede experimentation and thus limit learning about the profitability of investments. Imperfect information about one's own type, but willingness to experiment to learn one's type, leads to short-run negative expected returns to investments, with...

Many basic economic theories with perfectly functioning markets do not predict the existence of the vast number of microenterprises readily observed across the world. We put forward a model that illuminates why financial and managerial capital constraints may impede experimentation, and thus...

Despite evidence that delayed exit is a pervasive and consequential problem, relatively little is known about its causes. Moreover, the study of exit delay is confounded by the fact that behavioral theories arising in the literature on escalation of commitment and economic theories that...

In economic contests or tournaments where monitoring of the actions taken by contestants is imperfect competition is likely to drive not just work effort but other choices at the workers' discretion that increase the probability of winning. For example, when workers compete for promotion,...

We analyze impact of the freeway interchange collapse in San Francisco Bay area on difference in airfare quotes for travel into the area's three main airports. The incident temporarily made Oakland airport a less attractive choice for traveling to San Francisco, so we hypothesize that fares for...

Prior work in business experimentation concludes that involving other stakeholders besides the entrepreneur mitigates the challenge of biased experimental decision-making. However, this work also maintains a key simplifying assumption—that the actors involved have a common goal to maximize...

This paper develops a positive model of informal contracting in which rewards and punishments are not determined by an ex ante optimal plan but instead express the ex post moral sentiments of the arbitrating party. We consider a subjective performance evaluation problem in which a principal can...

We study the following game: each agent i chooses a lottery over nonnegative numbers whose expectation is equal to his budget b_i. The agent with the highest realized outcome wins (and agents only care about winning). This game is motivated by various real-world settings where agents each choose...

In the economic literature on market competition, firms are often modeled as single decision makers and the internal organization of the firm is neglected (unitary player assumption). However, as the literature on strategic delegation suggests, one can not generally expect that the behavior of...