Aggressive Pivots and Entrepreneurial Skill

• 成果类型: Article
• 署名作者: Li, Xuelin; Szydlowski, Martin
• 署名单位: Columbia University; Hong Kong University of Science & Technology
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20240075
• 发表日期: 2025
• 页码: 28-65
• 关键词: convertible securities; RELATIONAL CONTRACTS; venture; experimentation; INVESTMENT; reputation; EVOLUTION; MARKET; FIRMS; games

摘要

We study pivots as signaling devices in a dynamic experimentation model. An entrepreneur receives funding from an investor and has private information about a project, which requires costly experimentation to succeed. The entrepreneur has a real option to pivot, i.e., to abandon the project and to start a new one. Investors learn about the project from the arrival of exogenous information and from the entrepreneur's pivoting decisions. We characterize signaling equilibria in which high-skill entrepreneurs pivot early. Such early pivots are associated with higher likelihood of success and with more favorable funding terms following the pivot. (JEL D21, D82, L26, M13)