Saturday, February 29, 2020

Successful entrepreneurs' mean age at founding of successful start-ups for the 1-in-1,000 fastest growing new ventures is 45.0; prior experience in the specific industry predicts much greater rates of success

Age and High-Growth Entrepreneurship. Pierre Azoulay, Benjamin F. Jones, J. Daniel Kim, and Javier Miranda. American Economic Review: Insights. Mar 2020, Vol. 2, No. 1: Pages 65-82. https://pubs.aeaweb.org/doi/pdfplus/10.1257/aeri.20180582

Abstract: Many observers, and many investors, believe that young people are especially likely to produce the most successful new firms. Integrating administrative data on firms, workers, and owners, we study start-ups systematically in the United States and find that successful entrepreneurs are middle-aged, not young. The mean age at founding for the 1-in-1,000 fastest growing new ventures is 45.0. The findings are similar when considering high-technology sectors, entrepreneurial hubs, and successful firm exits. Prior experience in the specific industry predicts much greater rates of entrepreneurial success. These findings strongly reject common hypotheses that emphasize youth as a key trait of successful entrepreneurs. (JEL G24, J14, L26, M13, O31)


A Norwegian analyst is 8.4 %-points more likely to assign a buy rating to a Danish firm than an Austrian analyst; & is 6.7 % points more likely to assign a buy rating to a British firm than a French analyst

Pursiainen, Vesa, Cultural Biases in Equity Analysis (October 21, 2019). SSRN: http://dx.doi.org/10.2139/ssrn.3153900

Abstract: A more positive cultural trust bias by an equity analyst's country of origin toward a firm's headquarter country is associated with significantly more positive stock recommendations, controlling for analyst-month and firm-month fixed effects. The cultural bias effect is stronger for eponymous firms whose names mention their home country. The bias effect varies over time, increasing with negative sentiment. I find evidence of a negative North-South bias emerging during the European debt crisis, a UK-Europe divergence amid Brexit, and a Franco-British bias during the Iraq war. The share price reaction to buy recommendations by more positively biased analysts is weaker.

Keywords: cultural bias, trust, analyst recommendation, salience, sentiment
JEL Classification: A13, G02, G20, G24, D83

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My estimates suggest that a Norwegian analyst is 8.4 %-points more likely to assign a buy rating to a Danish firm than an Austrian analyst. Similarly, a Norwegian analyst is 6.7 %-points more likely to assign a buy-recommendation to a British firm than a French analyst.

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This paper provides evidence that cultural biases have a significant effect on equity analysts’ stock recommendations. I further find that there is substantial time variation in the effect of such biases, and that the strength of the bias effect is highly correlated with the general sentiment. In other words, bad economic times, when the level of pessimism is high and con- sumer confidence low, are also the times when cultural biases have the largest effect. These findings are all the more significant since equity analysts are financial market professionals that are often supposed to be less susceptible to behavioral biases than non-professionals. To the extent that these results generalize to the rest of the population, they suggest a link between times of economic hardship and increased cultural biases. This might contribute to the rise of nationalism and populism during economic downturns.

My finding that the salience of the firm’s nationality affects the strength of analysts’ cultural biases is also novel in the finance literature. While there is a vast literature on priming effects in psychology literature and, to a lesser extent, in experimental economics, my results suggest that there might be interesting new applications in financial markets and in non-experimental settings that have not been fully explored.

Finally, I find evidence that significant political events can introduce new cultural biases that are strong enough to affect stock recommendations. The much-discussed North-South divide in Europe and the stereotypes of lazy Mediterraneans invoked during the European debt crisis created a clearly visible negative bias in the stock recommendations of North European analysts on South European companies. Similarly, the diplomatic rifts between the UK and the rest of Europe amid the Brexit process, as well as between France and the UK over the Iraq war can be seen in analyst stock recommendations.

Human mate choice: Individuals displaying moderate levels of altruism were rated as more desirable than those displaying higher levels (and both more so than non-altruistic individuals)

The role of altruistic costs in human mate choice. Manpal Singh Bhogal et al. Personality and Individual Differences, Volume 160, 1 July 2020, 109939. https://doi.org/10.1016/j.paid.2020.109939

Abstract: There is a large body of research exploring the role of altruism in mate choice, showing altruism is a mating signal. However, it is still unclear whether these traits signal good genetic quality, due to their costly nature, or good partner/parenting qualities. We report the findings of three experiments that aimed to address this, by comparing the desirability of individuals who displayed either moderate or high levels of altruistic behaviour, and non-altruistic behaviour in dictator games and hypothetical social scenarios. These experiments adopted a variety of experimental designs to test our hypotheses. We consistently found that individuals displaying moderate levels of altruism were rated as more desirable than those displaying higher levels (and both more so than non-altruistic individuals). Our findings offer strong evidence for the underlying characteristics displayed by altruistic behaviour, rather than their absolute costs, being more important in mate choice. To our knowledge, this is the first paper to report a suite of experiments providing strong support that the cost of an altruistic act is more important than the act itself in a mate choice context. These findings go beyond and extend previous literature on altruism and mating by unpacking the role of prosociality in mate choice.


Experimentally reducing free will beliefs might affect how individuals evaluate others’ behavior; but professional judges manipulated to soften belief in free will won't recommend more lenient sentences

Genschow, Oliver, Davide Rigoni, Heinz Hawickhorst, Ellen Aschermann, and Marcel Brass. 2020. “Professional Judges’ Disbelief in Free Will and Punishment.” PsyArXiv. February 28. doi:10.31234/osf.io/4ucd3

Abstract: There is a debate in psychology and philosophy on the societal consequences of casting doubts about individuals’ belief in free will. Research suggests that experimentally reducing free will beliefs might affect how individuals evaluate others’ behavior. Past research has demonstrated that reduced free will beliefs decrease laypersons’ tendency towards retributive punishment. This finding has been used as an argument for the idea that promoting anti-free will viewpoints in the public media might have severe consequences for the legal system, because it may move judges towards softer retributive punishments. However, actual implications for the legal system can only be drawn by investigating professional judges. In the present research, we investigated whether judges (N = 87) are affected by reading anti-free will messages. The results demonstrate that although reading anti-free will texts reduces judges’ belief in free will, their recommended sentences are not influenced by their (manipulated) belief in free will.

Check also Freeing or freezing decisions? Belief in free will and indecisiveness. Michail D. Kokkoris, Roy F. Baumeister, Ulrich K├╝hnen. Processes, Volume 154, September 2019, Pages 49-61. https://www.bipartisanalliance.com/2019/09/belief-in-free-will-is-associated-with.html

Men had stronger preferences for risky behaviors than their partner’s ideal preference; relationship length was associated with a decline in women’s preference for their partner’s risk‐taking, but not men’s

Individual differences in preference for risky behaviors during courtship. Pavol Prokop  Adam Pazda. Scandinavian Journal of Psychology, February 27 2020. https://doi.org/10.1111/sjop.12628

Abstract: Engaging in risky behaviors is a sexual signalling strategy that men use to procure mates. The present study investigates men’s preferences for engaging in risky behaviors (along with women’s preferences for their male partner’s risky behavior) within dating couples. We investigated associations between relationship length, self‐perceived attractiveness, sociosexuality orientation, and preference for risky behaviors in a sample of 256 couples. Results indicated that men had stronger preferences for risky behaviors than their partner’s ideal preference. Furthermore, relationship length was associated with a decline in women’s preference for their partner’s risk‐taking, but not men’s preference for their own risk‐taking. Self‐perceived attractiveness was negatively associated with risk preference, and sociosexuality orientation was not directly related to risk preference. Female preferences for less intense male risky behaviors could reflect the need of paternal investment which is required for offspring care. Decreased male sexual signalling could account for lower preferences of risky behaviors in females who are involved in longer lasting romantic relationships.