Essays in Industrial Organization

The relationship between acquisitions and investment in research and development can be either directly or inversely related. The three arguments that explain the correlation between the acquisition likelihood and research intensity are managerial myopia, leveraged buyouts and strategic sale of the company motive. In the first chapter of my dissertation, I show that probability of failures and takeovers are negatively associated with firms’ research intensity in the biotechnology industry, which supports the managerial myopia argument. The second chapter of my dissertation is based on personality traits as an alternative approach to explain the backward induction failures. In this second essay, we demonstrate that risk taking and assertiveness reduce; self-esteem and intellect traits raise the probability of subgame perfect equilibrium plays in centipede games.