This dissertation comprises three essays that are linked by their focus on firm formation.
In Chapter I, "Entrepreneurship Does Pay," I answer the question of why someone would want to become an entrepreneur. Indeed, research has shown that the returns to entrepreneurship are low when compared with the returns to wage work. In this paper I challenge this view. I extend the data and show that the differential in earnings is in fact U-shaped, with entrepreneurs earning more than wage workers both early and late in their lives. I argue that the difference in the earnings profile can be rationalized.
In Chapter 2, "The Vote of Confidence Procedure and Efficient Budget Allocation," I tackle the problem facing a legislature that has to decide how to allocate its budget. In this paper I develop a model for and investigate the role that the vote of confidence procedure has on these budget allocation decisions. With this procedure, proposers can extract higher rents from other members of the body. As a consequence, budgets that propose investments that benefit all may not be proposed, even when they are efficient. Instead, pet projects will be financed. I test my model in a laboratory setting. The experimental results are qualitatively consistent with the theory.
In Chapter 3, I address the question of how an entrepreneur should pay his employees if he wants to maximize his profits. Indeed, in a moral hazard environment, when agents' outputs are correlated, a principal can improve the trade-off between incentives and risk-sharing by using both relative and absolute performance information. Despite clear theoretical advantages, wage schemes of this kind are rare. In this paper we study such a scheme in a controlled laboratory setting. The experimental results indicate that there are no first-order reasons to not use such schemes, which makes the lack of their use even more surprising.
|Advisor:||Jovanovic, Boyan, Midrigan, Virgiliu|
|Commitee:||Frechette, Guillaume, Schotter, Andrew, Xu, Daniel|
|School:||New York University|
|School Location:||United States -- New York|
|Source:||DAI-A 72/01, Dissertation Abstracts International|
|Subjects:||Entrepreneurship, Public administration|
|Keywords:||Entrepreneurship, Experiments, Firm formation, Principal agent, Public goods, State budget, Wage schemes|
Copyright in each Dissertation and Thesis is retained by the author. All Rights Reserved
The supplemental file or files you are about to download were provided to ProQuest by the author as part of a
dissertation or thesis. The supplemental files are provided "AS IS" without warranty. ProQuest is not responsible for the
content, format or impact on the supplemental file(s) on our system. in some cases, the file type may be unknown or
may be a .exe file. We recommend caution as you open such files.
Copyright of the original materials contained in the supplemental file is retained by the author and your access to the
supplemental files is subject to the ProQuest Terms and Conditions of use.
Depending on the size of the file(s) you are downloading, the system may take some time to download them. Please be