Replication data for: Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics
Principal Investigator(s): View help for Principal Investigator(s) Thomas Astebro; Holger Herz; Ramana Nanda; Roberto A. Weber
Version: View help for Version V1
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Project Citation:
Astebro, Thomas, Herz, Holger, Nanda, Ramana, and Weber, Roberto A. Replication data for: Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics. Nashville, TN: American Economic Association [publisher], 2014. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-07. https://doi.org/10.3886/E116385V1
Project Description
Summary:
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There is a growing body of evidence that many entrepreneurs seem to enter and persist in entrepreneurship despite earning low risk-adjusted returns. This has lead to attempts to provide explanations—using both standard economic theory and behavioral economics—for why certain individuals may be attracted to such an apparently unprofitable activity. Drawing on research in behavioral economics, in the sections that follow, we review three sets of possible interpretations for understanding the empirical facts related to the entry into, and persistence in, entrepreneurship. Differences in risk aversion provide a plausible and intuitive interpretation of entrepreneurial activity. In addition, a growing literature has begun to highlight the potential importance of overconfidence in driving entrepreneurial outcomes. Such a mechanism may appear at face value to work like a lower level of risk aversion, but there are clear conceptual differences—in particular, overconfidence likely arises from behavioral biases and misperceptions of probability distributions. Finally, nonpecuniary taste-based factors may be important in motivating both the decisions to enter into and to persist in entrepreneurship.
Scope of Project
JEL Classification:
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D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
J23 Labor Demand
L25 Firm Performance: Size, Diversification, and Scope
L26 Entrepreneurship
M13 New Firms; Startups
D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
J23 Labor Demand
L25 Firm Performance: Size, Diversification, and Scope
L26 Entrepreneurship
M13 New Firms; Startups
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