Professor Shai B. Bernstein, PhD

Current Position

since 7/23

Research Fellow Department of Laws, Regulations and Factor Markets

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

since 2020

Associate Professor

Harvard Business School

Research Interests

  • entrepreneurial finance
  • innovation

Shai B. Bernstein joined the institute as a Research Fellow in May 2022. His research focuses on financial issues related to start-ups and high growth firms, and the interaction of these issues with innovation and entrepreneurial activity.

Shai B. Bernstein is the Marvin Bower Associate Professor in the Entrepreneurial Management Unit at Harvard Business School and a Faculty Research Fellow at the National Bureau of Economic Research (NBER).

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Professor Shai B. Bernstein, PhD
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Contracting with Heterogeneous Externalities

Shai B. Bernstein Eyal Winter

in: American Economic Journal: Microeconomics, No. 2, 2012


We model situations in which a principal offers contracts to a group of agents to participate in a project. Agents' benefits from participation depend on the identity of other participating agents. We assume heterogeneous externalities and characterize the optimal contracting scheme. We show that the optimal contracts' payoff relies on a ranking, which arise from a tournament among the agents. The optimal ranking cannot be achieved by a simple measure of popularity. Using the structure of the optimal contracts, we derive results on the principal's revenue extraction and the role of the level of externalities' asymmetry.

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Who Creates New Firms When Local Opportunities Arise?

Shai B. Bernstein Emanuele Colonnelli Davide Malacrino Timothy McQuade

in: Journal of Financial Economics, No. 1, 2022


We examine the characteristics of the individuals who become entrepreneurs when local opportunities arise. We identify local demand shocks by linking fluctuations in global commodity prices to municipality-level agricultural endowments in Brazil. We find that the firm creation response is mostly driven by young and skilled individuals. The characteristics of these responsive entrepreneurs are significantly different from those of average entrepreneurs in the economy. By structurally estimating a novel two-sector model of a local economy, we highlight how the demographic composition of the local population can significantly affect the entrepreneurial responsiveness of the economy.

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Do Household Wealth Shocks Affect Productivity? Evidence From Innovative Workers During the Great Recession

Shai B. Bernstein Richard R. Townsend Timothy McQuade

in: Journal of Finance, No. 1, 2021


We investigate how the deterioration of household balance sheets affects worker productivity, and in turn economic downturns. Specifically, we compare the output of innovative workers who experienced differential declines in housing wealth during the financial crisis but were employed at the same firm and lived in the same metropolitan area. We find that, following a negative wealth shock, innovative workers become less productive and generate lower economic value for their firms. The reduction in innovative output is not driven by workers switching to less innovative firms or positions. These effects are more pronounced among workers at greater risk of financial distress.

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