Experimentation and project selectionscreening and learning

Resumo

Firms must strike a delicate balance between the exploitation of well-known business models and the exploration of risky, untested approaches. In this paper, we study financial contracting between an investor and a firm with private information about its returns from exploration and exploitation. The investor-optimal mechanism offers contracts with different tolerance for failures to screen returns from exploitation, and with different exposure to the project's revenues to screen returns from exploration. We derive necessary and sufficient conditions for private information about returns from exploration to have zero value to the firm. When these conditions fail, private information about exploration may even decrease the firm's payoff. (C) 2016 Elsevier Inc. All rights reserved.

Ficha do documento

Tipo

Artigo científico

Ano

2016

Instituição

Academic Press Inc Elsevier Science

Fonte

Repositório da FGV

Idioma

Inglês

Acesso

Acesso restrito

DOI

10.1016/j.geb.2016.02.001

Identificador

oai:repositorio.fgv.br:10438/23584

Temas

Economia

Palavras-chave

Adverse selectionExperimentationBandit problemMulti-dimensional screeningEntrepreneurshipEconomiaEmpreendedorismoProjetos - Seleção