IDEAS home Printed from https://ideas.repec.org/a/wly/mgtdec/v39y2018i5p592-600.html
   My bibliography  Save this article

Overconfidence and disappointment in venture capital decision making: An empirical examination

Author

Listed:
  • Samuel B. Graves
  • Jeffrey Ringuest

Abstract

We examine the effects of overconfidence in venture capital investing. Overconfidence in financial decision making is a robust, well†established finding, and its consequences for decisions by equity market investors, startup entrepreneurs, and CEO's of large firms have been comprehensively examined and documented. This paper considers the behavioral consequences of overconfidence by venture capitalists, comparing their anticipated returns to actual average returns. Our primary metric is Bell's disappointment, a measure of the difference between anticipated and actual payoff. We construct both deterministic and stochastic models, based on empirical data. We find that the average venture capitalist will experience substantial disappointment.

Suggested Citation

  • Samuel B. Graves & Jeffrey Ringuest, 2018. "Overconfidence and disappointment in venture capital decision making: An empirical examination," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 39(5), pages 592-600, July.
    • Handle: RePEc:wly:mgtdec:v:39:y:2018:i:5:p:592-600
    DOI: 10.1002/mde.2931
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/mde.2931
    Download Restriction: no
    File URL: https://libkey.io/10.1002/mde.2931?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Johannes Binswanger & Anja Garbely & Manuel Oechslin, 2023. "Investor beliefs about transformative innovations under uncertainty," Economica, London School of Economics and Political Science, vol. 90(360), pages 1119-1144, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:39:y:2018:i:5:p:592-600. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/7976 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.