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

In: Foundations of Economic Change

Author

Listed:
  • Zornitza Kambourova

    (Utrecht University School of Economics)

  • Erik Stam

    (Utrecht University School of Economics)

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.

Suggested Citation

  • Zornitza Kambourova & Erik Stam, 2017. "Entrepreneurs’ Over-optimism During the Early Life Course of the Firm," Economic Complexity and Evolution, in: Andreas Pyka & Uwe Cantner (ed.), Foundations of Economic Change, pages 333-353, Springer.
    • Handle: RePEc:spr:eccchp:978-3-319-62009-1_15
    DOI: 10.1007/978-3-319-62009-1_15
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