Aspirations, prospect theory and entrepreneurship: Evidence from Colombia

Francesco Bogliacino and Iván González Gallo

Econógrafos, Escuela de Economía from Universidad Nacional de Colombia, FCE, CID

Abstract: In this article we test the main hypotheses of the behavioural theory of entrepreneurship, namely that risk preferences are reference-dependent, that entrepreneurs are not ambiguity-averse and that aspirations act as a reference point in the sense postulated by Prospect Theory. We use an experimental methodology to elicit risk preferences and we manipulate aspirations by means of a psychological priming technique to guarantee exogenous variation of the independent variable. We also assess the relationship between risk preferences and correlates at the firm and individual level. Although causality cannot be established, as expected the risk preferences are mainly related with individual characteristics. If we look at the relationship between biases and firm performance we see some effect of loss aversion in interaction with personality traits (locus of control) and level of risk propensity. Our experimental fieldwork has been conducted in Colombia.

Keywords: Experiments; Prospect Theory; Aspirations; Entrepreneurship (search for similar items in EconPapers)
JEL-codes: C93 D81 L26 O54 (search for similar items in EconPapers)
Pages: 56
Date: 2015-03
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Persistent link: https://EconPapers.repec.org/RePEc:col:000176:022947

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