We study selection contests in which the strategic variable is degree of risk rather than amount of effort. The selection efficiency of such contests is examined. We show that the selection efficiency of a contest may be improved by limiting the competition in two ways; a) by having a small...

A theory is proposed where the pay policy and size of established firms are determined together with individual workers' entrepreneurship decision. The main results are twofold. First, taking the firm size as given, larger firms tend to have less flexible wages and produce entrepreneurs of...

If entrepreneurs are liquidity constrained and cannot borrow to operate on an efficient scale, those with more personal wealth should do better than those with less wealth. We investigate this hypothesis using a unique dataset from Norway. Consistent with liquidity constraints being present, we...

We study how complementarities and intellectual property rights affect the management of knowledge workers. The main results relay when a firm will wish to sue workers that leave with innovative ideas, and the effects of complementary assets on wages and on worker initiative. We argue that firms...

We consider financial structure and repayment behavior in a setting where cash flows are private information to the entrepreneur and the cost of enforcing repayment differs across security holders. If enforcement costs are lower for shareholders than for creditors, a mixed capital structure with...

This article considers a Lazear-Rosen tournament model where agents can influence both the spread of their output distribution (risk taking) and its mean. The unique equilibrium induces excessive risk taking and a low level of effort. By modifying the tournament to give the highest prize to the...