Economics

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Book Review: The Innovation Paradox

The Innovation Paradox: Why Good Businesses Kill Breakthroughs and How They Can Change

Tony Davila and Marc J. Epstein lay out a systematic approach for dealing with “creative destruction,” or disruptive innovation, via the “Startup Corporation,” a separate entity within a larger company used to spur revolutionary innovation. Although written for managers who wish to inspire their employees to create breakthrough innovations, the book has implications for investors as well. Read more

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The Herding Mentality: Behavioral Finance and Investor Biases

Like a medicine, prospect theory has been prescribed by many as an essential panacea for most if not all investment practitioners. Yet, heuristics — mental shortcuts — and other biases continue to affect some of our professional choices leading us to make mistakes. For a gifted few in the industry, biases are a source of alpha. But for many others biases impose a cost — a price paid for irrationalities. Read more

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