Taking Care: How Concerns about Prior Knowledge Affect the Financing of Novel Projects
SSRN Electronic Journal
2003
- 1Citations
- 6,700Usage
- 3Captures
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Example: if you select the 1-year option for an article published in 2019 and a metric category shows 90%, that means that the article or review is performing better than 90% of the other articles/reviews published in that journal in 2019. If you select the 3-year option for the same article published in 2019 and the metric category shows 90%, that means that the article or review is performing better than 90% of the other articles/reviews published in that journal in 2019, 2018 and 2017.
Citation Benchmarking is provided by Scopus and SciVal and is different from the metrics context provided by PlumX Metrics.
Article Description
Agents may propose bad projects because they unwittingly rely on defective prior knowledge. Concern about these honest mistakes encourages principals to examine track records of the agents' use of the same prior knowledge. But, such track records cannot exist for novel projects (or routine projects proposed under novel circumstances). Therefore agents may fail to obtain outside financing. This argument helps explain why highly novel ventures that are initially self-financed can subsequently attract outside financing without any decrease in standard 'incentive' or moral hazard problems. It also provides new insights about the differences in the novelty and other attributes of projects financed by individual 'angel' investors, venture capital partnerships and large public companies.
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