This paper investigates the effects of risk sharing supplier relationships on the profitability and cost of capital of a new investment project. We compare the three possibilities of not investing in the project, bearing the project risk alone and sharing the risk with a supplier. We find that...

In a world of increasingly extensive information, rational investors can make better decisions. However, reinforcement-oriented investors are also more likely to observe preferred signals close to their own perception. A focus on these signals distorts the perceived aggregate signal in the...