Paper by Joshua S. Gans: “Exploitation of disruptive technologies often requires resource deployment that creates conflict if there are divergent beliefs regarding the efficacy of a new technology. This arises when a visionary agent has more optimistic beliefs about a technological opportunity. Exploration in the form of experiments can be persuasive when beliefs differ by mitigating disagreement and its costs. This paper examines experimental choice when experiments need to persuade as well as inform. It is shown that, due to resource constraints, persuasion factors more highly for entrepreneurial than incumbent firms. However, incumbent firms, despite being able to redeploy resources using authority, are constrained in adoption as exploration cannot mitigate the costs of disagreement…(More)”.
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