Henrik Vetter 《Managerial and Decision Economics》2018,39(4):418-424

Under uncertainty, firms risk bankruptcy. We ask, in symmetric duopoly with stochastic demand, what happens when one firm minimizes the probability of negative profits while the other maximizes expected profits. When fixed costs are small, a firm can reduce the likelihood of negative profits. However, under a large fixed cost, the chance of negative profits increases upon deviation from a profit‐maximizing strategy. In any event, if one firm adopts a safety‐first strategy, the other firm has higher profits and a better survival chance by maximizing expected profit. Finally, we compare a profit maximizing to a safety‐first strategy in relation to ownership and control in firms.  相似文献   

    

Henrik Roeland Visser 《Journal of Economic Methodology》2017,24(3):344-348

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John Morgan  Henrik Orzen  Martin Sefton  Dana Sisak 《Journal of Economics & Management Strategy》2016,25(2):420-454

We report on the results of experiments where participants choose between entrepreneurship and an outside option. Entrepreneurs enter a market and then make investment decisions to capture value. Payoffs depend on both strategic risk (i.e., the investments of other entrepreneurs) and natural risk (i.e., luck). Absent natural risk, participants endogenously sort themselves into entrepreneurial and safe types, and returns from the two paths converge. Adding natural risk fundamentally changes these conclusions: Here we observe excessive entry and excessive investment so that entrepreneurs earn systematically less than the outside option. These payoff differences persist even after many repetitions of the task. With a risky outside option, entry further increases and about one‐third of entrepreneurs adopt a passive strategy, investing little or nothing. Finally, we examine an environment where an individual must become an entrepreneur but chooses the stakes over which she will compete. Due to under‐entry and under‐investment in the high stakes setting, the returns gap grows to over 15 percentage points. A two‐factor model incorporating loss aversion and love of winning can rationalize these returns patterns.  相似文献