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Expectation dynamics in venture capital investment

Research Achievements

Expectation dynamics in venture capital investment

A management student studied expectation dynamics in venture capital investment by examining the evolution of the fuel cell market and how social forces influence venture investment. Previous research focused on investors as primarily returns driven, evaluating projects in isolation. His view started with the presumption that factors such as built-in cognitive bias or contextual factors also influence investment decisions, departing from the view that volatility in venture investment stems not from irrational over-reaction, under-reaction, or herding behavior but from inherent volatility of the fundamentals. A growing collection of work demonstrates that venture investors do not evaluate projects in isolation; this project demonstrates that social forces play a significant role in the decisions of venture investors, and in areas of extremely high uncertainty - e.g., the emergence of new industry segments like renewables - these concerns swamp more ‘rational’ risk/return considerations.