Effectuation Publications Library

Access Journal Articles and Chapters Referencing Effectuation 

Welcome to the Publications Library

You can search, filter and access papers and abstracts below.

Have a paper to submit?  Go Here

Entrepreneurial Optimism in the Market for Technological Inventions


Gary Dushnitsky

How do potentially optimistic entrepreneurs attract prospective investors? We investigate an entrepreneur’s decision to pursue either disclosure?where investors inspect the invention?or a contingent payment scheme (CPS) offer (e.g., salary deferral, royalty-based license)?where an invention’s value is inferred from the entrepreneur’s willingness to make her pay contingent on the invention’s success. Using a parsimonious model, we highlight the role of optimism and demonstrate that it only affects CPS ex post. As a result, a novel trade-off unfolds ex ante: In choosing an action that maximizes the valuation of the invention, a moderately wealthy entrepreneur weighs optimism discount (affecting CPS) versus imitation discount (affecting disclosure). More broadly, the paper advances a view of entrepreneurs as optimists, thus departing from the prevailing approach, which characterizes entrepreneurs as opportunistic individuals who consciously pursue self-serving goals.

PDF Download



Submit A Paper to Expand the Dialogue