Over-Confidence and Entrepreneurial Choice Under Ambiguity

Anisa Shyti ()

No 982, HEC Research Papers Series from HEC Paris

Abstract: Entrepreneurship studies have attributed to over-confidence decisions to start a new venture. Many decision situations, through which over-confidence is measured, entail some degrees of uncertainty, (e.g., related to own skill or to competition). The aspect of uncertainty is largely neglected in over-confidence studies or entrepreneurial research. Both uncertainty and over-confidence influence individuals’ likelihood perceptions. Nevertheless, these two aspects are seldom jointly investigated, and the little evidence provides inconclusive results.

In this study, we experimentally investigate how uncertainty, as a property of the situation, and over-confidence, as a characteristic of decision makers’ beliefs, influence choice behavior. Our findings with Executive MBA participants show that over-confident decision makers choose less uncertain options for low likelihood outcomes and more uncertain options for high likelihood outcomes, contrary to neutral confidence decision makers, whose choices are in line with standard Prospect Theory predictions

Keywords: entrepreneurship; ambiguity attitudes; decision making; over-con fidence (search for similar items in EconPapers)
JEL-codes: D80 D81 L26 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2013-05-21
New Economics Papers: this item is included in nep-bec, nep-cbe, nep-cdm, nep-cse, nep-eur, nep-exp and nep-upt
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:0982

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