Institutions and the Allocation of Entrepreneurial Talent between Productive and Destructive Activities

Entrepreneurship is generally regarded as a force of change, innovation and development in modern economies. Entrepreneurs bring new and better products to markets, restore allocative efficiency through arbitrage and reinvest their profits. However, as Baumol (1990), Mehlum et al. (2003) and Acemoglu (1995) have argued, the same energy and talent can also be allocated to unproductive ends and reduce total welfare. In this paper we present a model that analyzes the allocation of a given entrepreneurial talent over destructive and productive activities. We show that in this model two stable equilibria can emerge. As Baumol (1990) hypothesized, institutions determine the pay-offs to both types of entrepreneurial activity and hence drive this allocation. But we also show that the distribution of initial wealth and entrepreneurial talent plays a decisive role. This analysis provides a different perspective on the importance of high quality institutions in developing countries and sheds light on the situation in conflict and post-conflict countries, where both informal and formal institutions arguably have broken down. Under such circumstances, our analysis shows that micro credits can support the transition to a productive equilibrium, because they help to overcome credit contraints without creating incentives for destructive entrepreneurship.growth, development, entrepreneurship, innovation, occupational choice

Propellant tank pressurization system Patent

Method and apparatus for pressurizing propellant tanks used in propulsion motor feed syste

`Breaking and entering' of contracts as a matter of bargaining power and exclusivity clauses

We analyze the effect of liquidated damage rules in exclusive contracts that are negotiated in a sequential bargaining process between one seller and two buyers with endogenous outside options. We show that assumptions on the distribution of bargaining power influence the size of the payment of damages and determine which contractual party benefits from including liquidated damage rules. Furthermore, we show that the effect of the payment of damages on the efficiency of the consummated deals depends on the possibility to sign more than one contract. Only if this is not possible, damage rules may prevent the breaking and entering of contracts and thus lead to inefficient deals in the market of corporate control, or allow for `naked' exclusion in the context of supplier contracts with externalities.sequential bargaining, bargaining power, outside option, liquidated damage rules, termination fees, exclusivity agreements

Resilience testing device Patent

Automated ball rebound resilience test equipment for determining viscoelastic properties of polymer

The Allocation of Entrepreneurial Talent and Destructive Entrepreneurship

Entrepreneurship is generally regarded as a force of change, innovation, and development in modern economies. Entrepreneurs bring new and better products to markets, restore allocative efficiency through arbitrage and reinvest their profits. However,destructive entrepreneurship, allocation of talent, development, institutions

Theory and Evidence on Mergers and Acquisitions by Small and Medium Enterprises

The theory of mergers and acquisitions (M&As) has been developed almost exclusively from the study of large deals by large firms. In this paper we argue that the behaviour and success of M&As by small and medium sized enterprises (SMEs) may be significantly different. Accordingly, we revisit established M&A theories, and develop a theoretical framework, and several testable hypotheses, regarding the distinctive features of SME M&As. Our empirical results support our expectations and show that, compared to large firms, acquiring SMEs: rely more intensively on external growth via M&As; are more likely to be withdrawn, suggesting that SMEs are more flexible, and more able to avoid deals that turn sour; and, finally, SME M&As are more likely to be financed with equity rather than debt, indicating that the influential financial pecking order theory is of less relevance to SMEs.mergers, acquisitions, small and medium sized enterprises

Joint state-parameter estimation of a nonlinear stochastic energy balance model from sparse noisy data

While nonlinear stochastic partial differential equations arise naturally in spatiotemporal modeling, inference for such systems often faces two major challenges: sparse noisy data and ill-posedness of the inverse problem of parameter estimation. To overcome the challenges, we introduce a strongly regularized posterior by normalizing the likelihood and by imposing physical constraints through priors of the parameters and states. We investigate joint parameter-state estimation by the regularized posterior in a physically motivated nonlinear stochastic energy balance model (SEBM) for paleoclimate reconstruction. The high-dimensional posterior is sampled by a particle Gibbs sampler that combines MCMC with an optimal particle filter exploiting the structure of the SEBM. In tests using either Gaussian or uniform priors based on the physical range of parameters, the regularized posteriors overcome the ill-posedness and lead to samples within physical ranges, quantifying the uncertainty in estimation. Due to the ill-posedness and the regularization, the posterior of parameters presents a relatively large uncertainty, and consequently, the maximum of the posterior, which is the minimizer in a variational approach, can have a large variation. In contrast, the posterior of states generally concentrates near the truth, substantially filtering out observation noise and reducing uncertainty in the unconstrained SEBM

What is your level of overconfidence? A strictly incentive compatible measurement of absolute and relative overconfidence.

This study contributes to the ongoing discussion on the appropriate measurement of overconfidence, in particular, its strictly incentive compatible measurement in experiments. Despite a number of significant advances in recent research, several important issues remain to be solved. These relate to the strictness of incentive compatibility, the identification of well-calibrated participants, the trichotomous classification into over- or underconfident and well-calibrated participants, and the generalization to measuring beliefs about the performance relative to other people. This paper develops a measurement of overconfidence that is improved regarding all four of these issues. We theoretically prove that our method is strictly incentive compatible and robust to risk attitudes within the framework of Cumulative Prospect Theory. Furthermore, our method allows the measurement of various levels of overconfidence and the direct comparison of absolute and relative confidence. We tested our method, and the results meet our expectations, replicate recent results, and show that a population can be simultaneously overconfident, well-calibrated, and underconfident. In our specific case, we find that more than ninety-five percent of the population believe to be better than twenty-five percent; about fifty percent believe to be better than fifty percent; and only seven percent believe to be better than seventy-five percent.Belief elicitation, Overconfidence, Better than average, Incentive compatibility

Venous Elastography: Validation of a Novel High-Resolution Ultrasound Method for Measuring Vein Compliance Using Finite Element Analysis

Ultrasonography for the noninvasive assessment of tissue properties has enjoyed widespread success. With the growing emphasis in recent years on arteriovenous fistulae (AVFs) for dialysis vascular access in patients with end-stage renal disease, and on reducing AVF failures, there is increasing interest in ultrasound for the preoperative evaluation of the mechanical and elastic properties of arteries and veins. This study used high-resolution ultrasound with phase-sensitive speckle tracking to obtain in vivo vein elasticity measurements during dilation. The results of this novel ultrasound technique were then compared to a computer model of venous strain. The computer model and ultrasound analysis of the vessel wall demonstrated internally consistent positive and negative longitudinal strain values as the vein wall underwent dilation. These results support further investigation of the use of phase-sensitive speckle tracking for ultrasound venous mapping for preoperative vascular access evaluation.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/78642/1/j.1525-139X.2009.00684.x.pd

Discovering Job Preemptions in the Open Science Grid

The Open Science Grid(OSG) is a world-wide computing system which facilitates distributed computing for scientific research. It can distribute a computationally intensive job to geo-distributed clusters and process job's tasks in parallel. For compute clusters on the OSG, physical resources may be shared between OSG and cluster's local user-submitted jobs, with local jobs preempting OSG-based ones. As a result, job preemptions occur frequently in OSG, sometimes significantly delaying job completion time. We have collected job data from OSG over a period of more than 80 days. We present an analysis of the data, characterizing the preemption patterns and different types of jobs. Based on observations, we have grouped OSG jobs into 5 categories and analyze the runtime statistics for each category. we further choose different statistical distributions to estimate probability density function of job runtime for different classes.Comment: 8 page