Working Papers

We examine business dynamics following a natural experiment: The staggered roll-out of a new technology, broadband internet, throughout Norway. The new technology led to a large, 20% increase in startup rates. Quality measures for these startups did not decline. In contrast, we do not find effects on the employment or assets of established firms. Applications to literatures on business dynamics, entrepreneurship, and technology adoption are discussed. Overall, our findings support ideas from Schumpeter (1934) and Arrow (1962) that startups play an important role in adapting the economy to new technology. This is joint with Tom Meling.

We show that exposure to an industry during upbringing is closely related to later-in-life entrepreneurial choices and success. A majority of male entrepreneurs start a firm in the same or a closely related industry as their fathers’ industry of employment. The probability of entrepreneurship in the exact same 5-digit sector as a father’s employment is much higher than in closely related sectors, indicating that the importance of exposure is especially great in narrowly defined skills and sectors. We then show that same-industry entrepreneurs outperform other entrepreneurs, making it less likely that the tendency is driven by simple awareness or preferences for working in that industry. In addition, fathers’ helping out is an unlikely mechanism, as the results hold for the subsample of entrepreneurs where the father is dead when starting the venture. Overall, exposure to specific industries during childhood drives entrepreneurial choices and creates entrepreneurial value. This project is joint with Paul Oyer.

To enforce insider trading laws, financial regulators require top executives in listed companies to make their own-company trades public. One implication of this regulatory focus is that executives below the top fly under the radar. We use register data from Norway to examine whether executives below the top in listed companies earn abnormal returns on purchases in own-company stock. We show evidence of positive abnormal returns of own-company purchases using several alternative benchmarks, including own-company sells, purchases and sells of other-company stocks, and purchases prior to joining the company. The estimates are economically large: about 100 basis points per month. This project is joint with Kasper Meisner Nielsen.

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 choice protocols by making participants earn their money at risk by completing manual tasks such as peeling potatoes. This leads to less risk-taking and to choices more consistent with those online survey respondents anticipate making with their own money. When realistic levels of risk aversion are important, experiments should require participants to earn their stakes. This is joint with Jae Ho Lee and Terrance Odean.

Several projects are underway, and working papers will be posted here eventually....