Seminar  |  11/07/2017 | 10:30 AM  –  11:30 AM

Brown Bag Seminar: Learning from Feedback: Evidence from New Ventures

Sabrina Howell (NYU)

Max Planck Institute for Innovation and Competition, Munich, Room 313

This paper studies how early stage entrepreneurs learn about the quality of their ventures. I assess the effect of negative feedback on abandonment using application and judging data from 87 new venture competitions, 34 of which privately informed founders of their relative rank. I use a difference-in-differences design and matching estimators to compare lower and higher ranked losers, across competitions in which they did and did not observe their standing. Receiving negative feedback increased venture abandonment by about 13 percent. The effect occurs quickly, doubles among women founders, and increases with signal precision. It decreases with venture maturity and riskiness.

Contact Person: Dr. Fabian Gaessler