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We report on the results of experiments where participants choose between entrepreneurship and an outside option. Entrepreneurs enter a market and then make investment decisions to capture value. Payoffs depend on both strategic risk (i.e. the investments of other entrepreneurs) and natural risk (i.e. luck). Absent natural risk, participants endogenously(More)
We study career choice when competition for promotion is a contest. A more meritocratic profession always succeeds in attracting the highest ability types, whereas a profession with superior promotion benefits attracts high types only if the hazard rate of the noise in performance evaluation is strictly increasing. Raising promotion opportunities produces(More)
We analyze a dynamic contest between two players who compete for a prize over a fixed number of stages. The player who is ahead at the end wins regardless of the history of the game. We find that if contestants are symmetric, their efforts will always be the same in the last stage of the contest. For all stages except the first and last equilibrium effort(More)
We study entrepreneurship in a setting where identical, loss-averse individuals choose between a risky entrepreneurial path and a safe outside option. The combination of effort and luck determine the single winner of the entrepreneurship market. We obtain a closed form solution to equilibrium entry and effort decisions. The novel implications of the model(More)
We experimentally study ways in which the social preferences of individuals and groups affect performance when faced with relative incentives. We also identify the mediating role that communication and leadership play in generating these effects. We find other-regarding workers tend to depress efforts by 15% on average. However, selfish workers are nearly(More)
Fear of failure can dominate the choices of individuals. We model its role in the decision to become an entrepreneur and subsequent investments made in pursuit of success using the framework of loss aversion. We show that when the threshold for success is suffi ciently high, fear of failure motivates additional sacrifices by entrepreneurs. When the(More)
We study self-selection into contests among a large population of heterogeneous agents. We show that entry into the “richer” contest (in terms of show-up fees, number or value of prizes) is non-monotone in ability. Entry into the more meritocratic (i.e., discriminatory) contest exhibits two interior extrema. Other testable predictions of our model are: 1)(More)
Web sites invest significant resources in trying to influence their visibility among online search results. In addition to paying for sponsored links, they invest in methods known as search engine optimization (SEO). We study the economic incentives of Web sites to invest in SEO and its implications on visitor satisfaction and welfare. Our focus is on(More)
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