Experiments typically rely on small payments to incentivize participants. This works if participants view these payments as fungible with their own money, but if participants view the payments as a windfall, they may behave differently in experiments than in real life. We modify standard risky...

Overstaffng appears to be a source of signi cant ineffciencies in organizations, but there is little economic theory that informs us why. We extend the canonical Lazear-Rosen tournament model to a dynamic setting that yields overstaffng at the managerial level. Overstaffng can be optimal in...

We document three new facts about entrepreneurship. First, a majority of male entrepreneurs start a firm in the same or a closely related industry as their fathers' industry of employment. Second, this tendency is correlated with intelligence: higher-IQ entrepreneurs are less likely to follow...

We document three new facts about entrepreneurship. First, a majority of male entrepreneurs start a firm in the same or a closely related industry as their fathers' industry of employment. Second, this tendency is correlated with intelligence: higher-IQ entrepreneurs are less likely to follow...

We consider a financing game with costly enforcement based on Townsend (1979), but where monitoring is non-contractible and allowed to be stochastic. Debt is the optimal contract. Moreover, the debt contract induces creditor leniency and strategic defaults by the borrower on the equilibrium...

What determines the quality of entrepreneurs? To address this question, the paper proposes a simple model of the interaction between individual workers' decision to become entrepreneurs and established firms' effort to keep their best workers and ideas. The main prediction from the model is that...

We study the effects of broadband internet use on the portfolio selection of individual investors. A public program in Norway provides plausibly exogenous variation in internet use. Our instrumental variables estimates show that internet use causes a substantial increase in stock market...

We study the effects of competitive preferences, where Chief Executive Officers (CEOs) compare their wage to the wage of other CEOs within the same industry, and derive utility from being ahead of them. We show that such social concerns work in the direction of CEO wages being positively...

The role of certifiers is to test products for quality, and to communicate the test results to the market. We construct a free-entry model of certification, where each certifier chooses a test standard and a price for certification. In equilibrium, certifiers differentiate their test standards,...