relation: https://publications.ut-capitole.fr/id/eprint/15775/
title: The dynamics of innovation and risk
creator: Biais, Bruno
creator: Rochet, Jean-Charles
creator: Woolley, Paul
subject: B- ECONOMIE ET FINANCE
description: We study the dynamics of an innovative industry when agents learn about the likelihood of negative shocks. Managers can exert risk-prevention effort to mitigate the consequences of shocks. If no shock occurs, confidence improves, attracting managers to the innovative sector. But, when condence becomes high, inefficient managers exerting low risk-prevention effort also enter. This stimulates growth, while reducing risk-prevention. The longer the boom, the larger the losses if a shock occurs. While these dynamics arise in the first-best, asymmetric information generates excessive entry of inefficient managers, earning informational rents, inflating the innovative sector and increasing its vulnerability.
publisher: TSE Working Paper
date: 2013-10
type: Monograph
type: NonPeerReviewed
format: text
language: en
identifier: https://publications.ut-capitole.fr/id/eprint/15775/1/wp_tse_448.pdf
identifier:   Biais, Bruno <https://www.idref.fr/031366147>, Rochet, Jean-Charles <https://www.idref.fr/03062620X> and Woolley, Paul  (2013) The dynamics of innovation and risk.  TSE Working Paper, n. 13-448     
relation: http://tse-fr.eu/pub/27746
language: en