We develop a model of firm learning in volatile markets with noisy signals and test its predictions using historical data from the Ifo Institute's Business Climate Survey. We find that firms' forecasts improve as they age. We also exploit German Reunification as a natural experiment where firms...

We extend Krugman's (1979) model of trade to multiple sectors or industries and show that, sector-by-sector, a bit of trade is worse than no trade at all. The reason is that the gains from the initiation of trade are second-order, while the welfare loss from the associated drop in varieties is...

We show that too much meritocracy, modeled as accuracy of performance ranking in contests, can be a bad thing: in contests with homogeneous agents, it reduces output and is Pareto inefficient. In contests with sufficiently heterogeneous agents, discouragement and complacency effects further...

We investigate the role of cultural distance — linguistic, religious and political — on merger and acquisition (M&A) completion and disentangle it from the role of different regional and national formal institutions as well as geographic distance. In a large-scale sample of German and...

Across social science the observation that experience in X increases performance in X is broadly established. The empirical literature on quantifying the effect of acquisition experience on the performance of future acquisitions is an anomaly - only half the studies published in top management...

In September 2008, Lehman Brothers and Merrill Lynch had similar business strategies and exposure to toxic assets, and both faced insolvency. However, while Lehman was allowed to fail, Merrill was rescued. For Lehman employees without board positions (Lehman "Orphans"), bankruptcy was thus...