This study examines the influence of market conditions—hot versus cold—on the decision-making processes of venture capitalists (VCs). Prior research suggests that VCs prefer costly signals over cheap talk when assessing new ventures under static conditions. However, based on a cognitive perspective, we argue that the dynamic nature of market conditions alters VCs’ information processing. In cold markets, VCs prioritize signals, whereas, in hot markets, they emphasize less costly cues that resonate with prevailing optimism, often at the expense of signals. Supported by a conjoint experiment with 76 VCs, our results clarify the pivotal role of market conditions on the effectiveness of entrepreneurs’ signaling strategies.

中文翻译：

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风险投资家在冷热市场中的决策：信号和廉价言论的影响


本研究探讨了市场状况（热与冷）对风险投资家 (VC) 决策过程的影响。先前的研究表明，在静态条件下评估新企业时，风险投资家更喜欢昂贵的信号而不是廉价的谈话。然而，基于认知的角度，我们认为市场条件的动态性质改变了风险投资的信息处理。在冷市场中，风投优先考虑信号，而在热市场中，他们强调成本较低、与普遍乐观情绪产生共鸣的线索，但往往会牺牲信号。在 76 家风险投资公司联合实验的支持下，我们的结果阐明了市场条件对企业家信号策略有效性的关键作用。