Overconfidence and excess entry: a comparison between students and managers

A. Rodrigues (), Newton Da Costa () and Sergio Da Silva
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A. Rodrigues: Federal University of Santa Catarina
Newton Da Costa: Federal University of Santa Catarina

Economics Bulletin, 2011, vol. 31, issue 3, 2549-2557

Abstract: Overconfidence can lead to excessive business entry. Here we replicate the pioneer experiment finding this nexus (Camerer and Lovallo 1999) and extend it in two major directions: (1) to consider managers as well as student subjects and (2) to explicitly take into account selected characteristics of the manager subjects. We find that managers are more prone to the nexus overconfidence-excess entry than students are. In particular, we find that left-handed, married, and emotionally aroused managers are more prone to excess entry.

Keywords: excess business entry; overconfidence; unrealistic optimism (search for similar items in EconPapers)
JEL-codes: C9 M2 (search for similar items in EconPapers)
Date: 2011-09-07
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