This thesis comprises three essays dealing with information and learning in business decision-making.
The first essay presents a theory explaining the existence of dedicated financial intermediaries (i.e., venture
capitalists) who serve the entrepreneurial sector. Building on the well-established idea that informational
asymmetries are central in entrepreneurial financing, the main hypothesis is that venture capitalists exist
precisely because they develop special expertise in reducing information-based market failures through
careful selection, monitoring, and other means. The primary contribution of this chapter lies in linking the
theoretical structure to detailed evidence on venture capital investment in Canada. Specifically, the theory
suggests four empirical predictions. It is argued that the evidence is consistent with these predictions and
therefore with the central hypothesis.
In the second essay, two agents, an entrepreneur and a venture capitalist, engage in repeated, ultimatum-style
bargaining about a two-dimensional financial contract. They base their offers on simple heuristics, which
are processed by a genetic algorithm. The algorithm captures some fundamental principles of human
learning. A simulation experiment reveals that with incomplete information, disagreement and delays in
bargaining are observed more frequently than under complete information. This can be explained by the
sensitivity of agents' learning to information. It is also found that the agent in the weak bargaining position
might benefit from incomplete information.
The third essay explores a range of hypotheses that might explain differential intra-industry firm
performance. A behavioral model is developed in which simple rules guide firms on whether to adapt
internally and/or imitate others in order to effect organizational change. This dynamic, multi-period model,
in which firms simultaneously compete, is simulated under assumptions which correspond to the hypotheses
about differential firm performance. Results reveal that stochastic managerial choice and organizational
inertia are plausible sources of differential firm performance. Experiential learning, in and of itself, has only
limited influence on heterogeneous firm performance. Interestingly, imitation may be an undesirable strategy
for underperforming firms either because it is aimed at a "moving target" or because the targeted market
niche is already crowded. / Business, Sauder School of / Graduate
| Identifer | oai:union.ndltd.org:UBC/oai:circle.library.ubc.ca:2429/9923 |
| Date | 05 1900 |
| Creators | Zott, Christoph |
| Source Sets | University of British Columbia |
| Language | English |
| Detected Language | English |
| Type | Text, Thesis/Dissertation |
| Format | 7699510 bytes, application/pdf |
| Rights | For non-commercial purposes only, such as research, private study and education. Additional conditions apply, see Terms of Use https://open.library.ubc.ca/terms_of_use. |
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