Biais, Bruno; Rochet, Jean-Charles; Woolley, Paul - London School of Economics (LSE) - 2009
fundamental value of the innovation: is it strong or fragile? Second, it is difficult to monitor managers, which creates moral … become too high, investors may give up on incentives, and risk and failure rates rise. Furthermore, if the innovation is … fragile, eventually there is a crisis, and the industry shrinks. Our model thus captures important stylized facts of the …