Do Entrepreneurs Make Predictable Mistakes? Evidence from Corporate Divestitures
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Mises (1990) famously showed that economic calculation is not possible without private property in all markets, especially markets for factors of production. The Austrian business-cycle literature (Mises 1934; Hayek 1935; Garrison 2001) suggests that entrepreneurial errors are more likely under government sponsored credit expansion. This article makes a related argument: Entrepreneurial decisions to make acquisitions that will later be regretted, and divested, are more likely in the wake of government intervention in particular industries.