2023 - Reprints: Managerial Economics
Searching forever after, American Economic Journal: Microeconomics, 14(3), 558-90, 2022
Y. Antler and B. Bachi
(Reprint No. 408)
Research No.: 00620100
We study a model of two-sided search in which agents' strategic reasoning is coarse. In equilibrium, the most desirable agents behave as if they were fully rational, while for all other agents, coarse reasoning results in over-optimism with regard to their prospects in the market. Consequently, they search longer than is optimal. Moreover, agents with intermediate match values may search indefinitely while all other agents eventually marry. We show that the share of eternal singles converges monotonically to one as search frictions vanish. Thus, improvements in search technology may backfire and even lead to market failure.
What drives exploration? Convergence and divergence of exploration tendencies among alliance partners and competitors, Academy of Management Journal, 63(5), 1425-1454, 2020
G. Duysters, D. Lavie, A. Sabidussi, and U. Stettner
(Reprint No. 410)
Research No.: 07320100
Management research has alluded to organizational and environmental conditions that drive firms’ tendencies to explore versus exploit. We complement this research by developing theory on vicarious learning to explain how a firm adjusts its own exploration level based on the exploration levels of its alliance partners and competitors. Using panel data on 180 electronics firms publicly traded in the United States, we reveal an inverted U-shaped association between a firm’s exploration tendency and the exploration levels of its partners and competitors. Convergence is explained by imitation and legitimation, while divergence is associated with risk perception and specialization in the knowledge domain. We further show how the convergence of the exploration tendency becomes stronger under firm-specific uncertainty but weaker when the exploration patterns exhibited by the firm’s partners and competitors are incoherent. Finally, counter to expectations, we show that this convergence is weakened by the technological proximity of the firm’s competitors. Our findings inform research on vicarious learning and the antecedents of exploration by underscoring the role of interdependence in firms’ exploration tendencies.
