Prediction Ability

Katsuya Takii

Review of Economic Dynamics, 2003, vol. 6, issue 1, 80-98

Abstract: This paper models the value of managerial human capital as a function of the ability to predict profitability in the presence of risk. The model implies that the marginal productivity of prediction ability increases with increasing risk and that managers with high prediction ability will tend to work in risky industries. This prediction contrasts with the traditional view that talented managers concentrate in large firms. Business School placement data supports this hypothesis; talented Business School graduates choose to work in risky industries. (Copyright: Elsevier)

Keywords: manager; entrepreneur; human capital; risk; complementarity; assignment (search for similar items in EconPapers)
JEL-codes: D80 J23 J44 M13 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (19)

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DOI: 10.1016/S1094-2025(02)00009-1

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