蝌蚪网 Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Aggressive Pivots and Entrepreneurial Skill
蝌蚪网 Journal: Microeconomics
vol. 17,
no. 2, May 2025
(pp. 28–65)
Abstract
We study pivots as signaling devices in a dynamic experimentation model. An entrepreneur receives funding from an investor and has private information about a project, which requires costly experimentation to succeed. The entrepreneur has a real option to pivot, i.e., to abandon the project and to start a new one. Investors learn about the project from the arrival of exogenous information and from the entrepreneur's pivoting decisions. We characterize signaling equilibria in which high-skill entrepreneurs pivot early. Such early pivots are associated with higher likelihood of success and with more favorable funding terms following the pivot.Citation
Li, Xuelin, and Martin Szydlowski. 2025. "Aggressive Pivots and Entrepreneurial Skill." 蝌蚪网 Journal: Microeconomics 17 (2): 28–65. DOI: 10.1257/mic.20240075Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D82 Asymmetric and Private Information; Mechanism Design
- L26 Entrepreneurship
- M13 New Firms; Startups