Entrepreneurs’ Over-optimism During the Early Life Course of the Firm

Zornitza Kambourova () and Erik Stam
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Zornitza Kambourova: Utrecht University School of Economics

A chapter in Foundations of Economic Change, 2017, pp 333-353 from Springer

Abstract: Abstract Recent research on cognitive biases in decision making suggests that over-optimism critically influences entrepreneurs’ decisions to establish and sustain new firms. This paper looks at entrepreneurs’ over-optimism during the early life course of the firm, in order to uncover the dynamics and persistence of over-optimism. We use a representative sample of start-ups in the Netherlands, which we divide into solo self-employed and employer firms. We find that while there is a persistence of over-optimism for the solo self-employed, namely initial over-optimist are more likely to be overoptimistic in subsequent periods; this is not the case for the employer firms.

Keywords: Over-optimism; Entrepreneurship; Learning; Risk-propensity; Biases; Early life course of the firm; Firm growth (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:spr:eccchp:978-3-319-62009-1_15

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DOI: 10.1007/978-3-319-62009-1_15

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