eprintid: 15775
rev_number: 8
eprint_status: archive
userid: 1482
importid: 105
dir: disk0/00/01/57/75
datestamp: 2014-07-09 17:40:09
lastmod: 2021-04-02 15:48:23
status_changed: 2014-07-09 17:40:09
type: monograph
metadata_visibility: no_search
creators_name: Biais, Bruno
creators_name: Rochet, Jean-Charles
creators_name: Woolley, Paul
creators_idrefppn: 031366147
creators_idrefppn: 03062620X
creators_affiliation: Toulouse School of Economics (CNRS-CRM & PWRI-IDEI)
creators_affiliation: University of Zurich (SFI) and Toulouse School of Economics (PWRI-IDEI)
creators_affiliation: London School of Economics (PWC)
title: The dynamics of innovation and risk
ispublished: pub
subjects: subjects_ECO
abstract: 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.
date: 2013-10
date_type: published
publisher: TSE Working Paper
official_url: http://tse-fr.eu/pub/27746
faculty: tse
divisions: tse
language: en
has_fulltext: TRUE
view_date_year: 2013
full_text_status: public
monograph_type: working_paper
series: TSE Working Paper
volume: 13-448
book_title: TSE Working Paper
oai_identifier: oai:tse-fr.eu:27746
harvester_local_overwrite: faculty
harvester_local_overwrite: site
harvester_local_overwrite: creators_idrefppn
oai_lastmod: 2015-07-31T18:00:02Z
oai_set: tse
site: ut1
citation:   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     
document_url: https://publications.ut-capitole.fr/id/eprint/15775/1/wp_tse_448.pdf