G2TT
来源类型Discussion paper
规范类型论文
来源IDDP12329
DP12329 Badge of Honor or Scarlet Letter? Unpacking Investors’ Judgment of Entrepreneurs’ Past Failure
Mirjam van Praag
发表日期2017-09-23
出版年2017
语种英语
摘要Research shows that most ventures fail, yet it has devoted limited attention to the consequences of entrepreneurs’ past failure for investors’ decisions. Our motivating insight is that failure can be due to bad luck, lack of skill or both. Therefore, failure conveys ambiguous information about skill. We predict that investors will discount entrepreneurs that experienced past failure. However, in the presence of a signal of skill, the magnitude of the failure discount is reduced. We test our predictions using an online experiment where respondents are potential investors in seed stage ventures via equity crowdfunding. Respondents evaluate a realistic investment opportunity in a between-subjects design, where we decompose the effect of failure into luck and skill. Our results indicate that investors discount entrepreneurs who have experienced failure. Past failure in the presence of a signal of skill, however, is not discounted. The findings indicate no discount of failure based on the “failed” label only. Overall, our analysis sheds light on the rationality of investors. In a world where entrepreneurial failure is prevalent, we find that investors are sensitive to its core drivers: luck and skill.
主题Industrial Organization ; Labour Economics
关键词Entrepreneur Venture Failure Luck Skill Investors Crowdfunding Experiment
URLhttps://cepr.org/publications/dp12329
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/541139
推荐引用方式
GB/T 7714
Mirjam van Praag. DP12329 Badge of Honor or Scarlet Letter? Unpacking Investors’ Judgment of Entrepreneurs’ Past Failure. 2017.
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