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...

Communism in East Germany sought to dampen the effect of market forces on firm productivity for nearly 40 years. How did East German firms respond to the free market after being thrust into it in 1990? We use a formal learning model and German business survey data to analyze the lasting impact...

This short paper extends the analysis of Morgan and Tumlinson (2018) to the setting of a small open economy. We show that in this economy featuring endogenous free entry of firms: (1) Both the number and production of firms is socially optimal. Furthermore production is efficient --- it...

We develop a formal model to understand the selection and influence effects of social proximity between business partners. Consistent with the model’s predictions, we find that US venture capitalists (VCs) are more likely to select startups with coethnic executives for investment, particularly...

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...