Following periods of intense technological innovation, R&D is a critical driver of technology diffusion, but it is subject to frictions that can slow down the diffusion process. Building on the literature that documents the real effects of investor sentiment, we study whether sentiment...

Due to frictions like informational externalities, firms invest too little in learning the productivity of newly available technologies through small-scale experimentation. I study the effect of investor sentiment on the relation between technological innovation and future firm-level R&D...