Learning from Feedback: Evidence from New Ventures*

Large sample properties of matching estimators for average treatment effects

Sabrina T Howell

Review of Finance, 2021, vol. 25, issue 3, 595-627

Abstract: This article studies how early-stage entrepreneurs respond to negative feedback about the quality of their ventures. We use data from new venture competitions, some of which privately inform founders of their relative rank. The empirical strategy compares lower and higher ranked losers across competitions in which they did and did not observe their standing. Receiving negative feedback increases average venture abandonment by 13%. Differences in responsiveness—for example, in venture risk, venture maturity, and signal precision—are consistent with particular theories about entrepreneurship, including the importance of experimentation.

Keywords: Entrepreneurship; Learning; Feedback; Overconfidence; New venture competitions (search for similar items in EconPapers)
JEL-codes: D83 G24 L26 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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