Investor beliefs about transformative innovations under uncertainty

Modern economies sometimes produce potentially transformative innovations whose development and implementation involves large amounts of capital. Often, the required initial investments are fraught with uncertainty, there is a scarcity objective information that would help interested investors to predict success. How, in this situation, do form subjective beliefs about prospective returns? This paper explores role competing, specialized financial intermediaries incentivized steer capital either towards or away from innovation. We develop model which investors' arise competitive campaign game, belief contest, between two intermediaries. discuss how regulator—who does not possess superior information—may influence contest outcome favour impartial beliefs, exuberant overly pessimistic ones.