require greater risk-taking than more incremental approaches. To understand how managers respond to uncertainty when making … projects. The results suggest that the risk preferences of managers in charge of research investments may have an oversized …

We propose a model where investors hire fund managers to invest either in risky bonds or in riskless assets. Some … managers have superior information on the default probability. Looking at the past performance, investors update beliefs on … their managers and make firing decisions. This leads to career concerns which affect investment decisions, generating a …

aversion, higher initial assets, preferences for entrepreneurship over employment, and optimistic beliefs about the payoffs …