The Allocation of Limited Entrepreneurial Attention

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Springer Science & Business Media, Oct 31, 1998 - Business & Economics - 163 pages
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The Allocation of Limited Entrepreneurial Attention examines the implications of allocating limited entrepreneurial attention among activities or projects. This book maintains that attention is simultaneously limited in that a decision maker can pay attention to only one thing at a time, and entrepreneurial in that it may be allocated to evaluating a potential new project for possible adoption. However, since the outcome of the allocation of attention is not certain, the number of projects among which attention can be allocated is stochastic and the maximum number of projects is endogenously determined by the optimal allocation of limited entrepreneurial attention and describes the implications of this analysis for a number of economic problems.
 

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Contents

THE ENTREPRENEUR IN ECONOMIC THEORY
1
A Brief History
3
Entrepreneurial Limitations
6
Implications of Limited Entrepreneurial Attention
8
Conclusion
11
References
13
LIMITED ATTENTION
17
Limited Attention in Economic Models
19
Incomplete Contracts
90
Conclusion
94
References
97
THE INTERNALIZATION OF TRANSACTIONS
99
Related Literature
100
Moral Hazard and Opportunism
101
Firm versus Market Transactions
102
Internal versus Market Transactions
103

Conclusion
23
References
24
ALLOCATING LIMITED ENTREPRENEURIAL ATTENTION
27
The Optimal Policy
30
General Results
31
Adoption and Growth
33
Efficiency
34
Average Number of Projects
36
Variations on the Basic Model
37
Optimal Failure Rate
38
Evaluation Costs
41
Evolution of Markets
43
Terminations
46
Entry
48
Heterogeneous Projects and Efficiency
49
Efficient Moral Hazard
51
Opportunity Costs
54
Conclusion
55
References
56
INNOVATION FIRM SIZE AND GROWTH
57
Related Literature
58
The Schumpeterian Hypothesis
63
Optimal RD
70
Extensions
73
Conclusion
75
References
76
CAREER CHOICE
79
The Implications of the Model
80
Conclusion
83
References
84
OPTIMALLY INCOMPLETE CONTRACTS
85
Related Literature
86
Asset Specificity and Opportunism
104
Transaction Costs and Firm Size
105
Endogenous Transaction Costs
106
Evolution to Market Transactions
107
Conclusion
108
References
109
THE ROLE OF THE VENTURE CAPITALIST
111
Related Literature
113
The Venture Capitalists Optimal Allocation
116
Entry of Venture Capitalists
117
General Partner and Limited Partners
118
Investments in Later Stage Ventures
119
Socially Optimal Consultation
120
Empirical Evidence
122
Alternative Formulations
123
Conclusion
124
INDEPENDENT CONTRACTORS
127
Bilateral PA and Common Agency Models
128
The Entrepreneurial Agent
130
Conclusion
135
References
136
CONCLUSION
137
Efficiency Wages
138
Bank Loans
140
Futures Markets
143
Extensions
144
References
145
APPENDIX
147
References
160
NAME INDEX
161
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