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Insights into the Psychological Profiles of Entrepreneurs

In: Advances in Entrepreneurial Finance

Author

Listed:
  • Hersh Shefrin

    (Santa Clara University)

Abstract

Entrepreneurs derive lower risk-adjusted returns than non-entrepreneurs, but are compensated through non-pecuniary benefits. This chapter reports on findings from survey evidence. The main findings are as follows: A key non-pecuniary benefit to entrepreneurs is achieving greater control over their working environment. Doing so leads entrepreneurs to report achieving higher affect and well-being than non-entrepreneurs. Entrepreneurs report that they are more skilled socially than non-entrepreneurs. This might provide a partial explanation for why entrepreneurs have a higher marriage rate and larger families than non-entrepreneurs. Entrepreneurs exhibit greater dispositional optimism than non-entrepreneurs. However, in the study sample, the difference is not statistically significant. In terms of preference for lottery-like outcomes, entrepreneurs find prospects offering high returns with low probability attractive, but regard control of their environment as more important than the preference for positive skewness.

Suggested Citation

  • Hersh Shefrin, 2011. "Insights into the Psychological Profiles of Entrepreneurs," Springer Books, in: Advances in Entrepreneurial Finance, chapter 0, pages 173-181, Springer.
    • Handle: RePEc:spr:sprchp:978-1-4419-7527-0_9
    DOI: 10.1007/978-1-4419-7527-0_9
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    Cited by:

    1. Enrico Maria Cervellati & Pierpaolo Pattitoni & Marco Savioli, 2013. "Entrepreneurial Under-Diversification: Over Optimism and Overconfidence," Working Paper series 09_13, Rimini Centre for Economic Analysis, revised May 2016.
    2. E. M. Cervellati & P. Pattitoni & M. Savioli, 2016. "Cognitive Biases and Entrepreneurial Under-Diversification," Working Papers wp1076, Dipartimento Scienze Economiche, Universita' di Bologna.

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