Emotions and inventor productivity: Evidence from terrorist attacks

We examine whether the emotional shocks associated with terrorist attacks affect local inventors' productivity. We find that high‐fatality attacks make inventors less innovative, and low‐fatality attacks make them more innovative. Inventors living in high risk‐taking environments have greater increase in productivity following low‐fatality attacks, while less decrease in productivity following high‐fatality attacks. Further, the effect of terrorist attacks on inventor productivity comes mainly from exploratory innovation which involves more risks. Inventors affected by high‐fatality attacks are also more likely to move to places without any significant terrorist attack history, but there is no such effect for low‐fatality attacks.