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Prediction Based on Entrepreneurship-Prone Personality Profiles: Sometimes Worse Than the Toss of a Coin

Alexander Konon and Alexander Kritikos ()

No 1763, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: The human personality predicts a wide range of activities and occupational choices—from musical sophistication to entrepreneurial careers. However, which method should be applied if information on personality traits is used for prediction and advice? In psychological research, group profiles are widely employed. In this contribution, we examine the performance of profiles using the example of career prediction and advice, involving a comparison of average trait scores of successful entrepreneurs with the traits of potential entrepreneurs. Based on a simple theoretical model estimated with GSOEP data and analyzed with Monte Carlo methods, we show, for the first time, that the choice of the comparison method matters substantially. We reveal that under certain conditions the performance of average profiles is inferior to the tossing of a coin. Alternative methods, such as directly estimating success probabilities, deliver better performance and are more robust.

Keywords: Advice; personality; entrepreneurship; profiles (search for similar items in EconPapers)
JEL-codes: C15 D81 L26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent, nep-ino and nep-sbm
Date: 2018
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Working Paper: Prediction Based on Entrepreneurship-Prone Personality Profiles: Sometimes Worse Than the Toss of a Coin (2018) Downloads
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