Hidden Talents: Entrepreneurship and Pareto-Improving Private Information

Andrew F Daughety () and Jennifer Reinganum ()

Journal of Economics & Management Strategy, 2009, vol. 18, issue 3, pages 901-934

Abstract: "Two entrepreneurs, each privately informed about her own talent, simultaneously and noncooperatively choose their efforts in producing a new product. Product quality depends on both entrepreneurs' talents and efforts, but is unobservable by potential buyers prior to purchase; however, buyers can observe the entrepreneurs' individual efforts. Because the entrepreneurs share the payoff, each is tempted to shirk. However, the need to signal quality to potential buyers serves as a credible commitment to provide greater effort. Thus, the "problem" of adverse selection mitigates the problem of moral hazard, so that a new venture can perform better than the corresponding mature market." Copyright (c) 2009, The Author(s) Journal Compilation (c) 2009 Wiley Periodicals, Inc..

Date: 2009

Downloads: (external link)
http://www.blackwell-synergy.com/servlet/useragent ... &year=2009&part=null link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:bla:jemstr:v:18:y:2009:i:3:p:901-934

Ordering information: This journal article can be ordered from
http://www.blackwell ... ref=1058-6407&site=1

Access Statistics for this article

More articles in Journal of Economics & Management Strategy from Blackwell Publishing
Series data maintained by Christopher F. Baum ().