Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics
Thomas Astebro (),
Ramana Nanda () and
Roberto Weber ()
Post-Print from HAL
There is a growing body of evidence that many entrepreneurs seem to enter and persist in entrepreneurship despite earning low risk-adjusted returns. This has lead to attempts to provide explanations--using both standard economic theory and behavioral economics--for why certain individuals may be attracted to such an apparently unprofitable activity. Drawing on research in behavioral economics, in the sections that follow, we review three sets of possible interpretations for understanding the empirical facts related to the entry into, and persistence in, entrepreneurship. Differences in risk aversion provide a plausible and intuitive interpretation of entrepreneurial activity. In addition, a growing literature has begun to highlight the potential importance of overconfidence in driving entrepreneurial outcomes. Such a mechanism may appear at face value to work like a lower level of risk aversion, but there are clear conceptual differences--in particular, overconfidence likely arises from behavioral biases and misperceptions of probability distributions. Finally, nonpecuniary taste-based factors may be important in motivating both the decisions to enter into and to persist in entrepreneurship.
Keywords: entrepreneurship; economics (search for similar items in EconPapers)
Note: View the original document on HAL open archive server: https://hal-hec.archives-ouvertes.fr/hal-01066493
References: Add references at CitEc
Citations View citations in EconPapers (9) Track citations by RSS feed
Published in Journal of Economic Perspectives, American Economic Association, 2014, 28 (3), pp.49-70. <10.1257/jep.28.3.49>
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
Working Paper: Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics (2015)
Journal Article: Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01066493
Access Statistics for this paper
More papers in Post-Print from HAL
Series data maintained by CCSD ().