L9

Question 1

sumarize “The return to independent invention: Evidence of unrealistic optimism, risk seeking or skewness loving? (Åsterbro)

Answer 1

50 % of inventors with inventions of very low quality persist in developing their projects although recommended against it
Because of risk seeking, unrealistic optimism, • Skewness lovers (Attracted to unfair gambles with negative expected values because skew distribution of return with a tiny probability of extreme gains)

Question 2

sumarize “Overoptimism and the performance of Entrepreneurial firms” (Lowe & Ziedonis)

Answer 2

• Entrepreneurs commercializing university technology are not overoptimistic
  
  • Licenses to start-ups generate revenues at least as high as for established firms
• Start-ups continue unsuccessful development effort for longer periods of time than established firms

Question 3

Why establish start-ups? (Lowe & Ziedonis)

Answer 3

• Transaction costs in transferring technology to outside firm (adverse selection, moral hazard) may prevent market for technology to operate smoothly
  
  • It is difficult to transfer knowledge since a lot of technology is tacit
  • Inventor may get greater monetary returns if commercializing invention herself
• Overconfidence or other biases