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Author: | Jaimovich, E. |
Title: | Adverse selection and entrepreneurship in a model of development |
Journal: | Scandinavian Journal of Economics
2010 : VOL. 112:1, p. 77-100 |
Index terms: | adverse selection entrepreneurship skills risk sharing poverty theories models |
Language: | eng |
Abstract: | In this paper, a theory is presented in which talented entrepreneurs are identified as the key agents driving the process of development (here as: dev.) and modernization. Entrepreneurial skills are private information, preventing full risk sharing. Dev. into a modern industrial economy might fail to occur because potentially talented entrepreneurs may refrain from taking on the entrepreneurial risks as a way to avoid income shocks. The informational asymmetries are endogenous to the process of dev. in the model. |
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