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New Results on Entrepreneurship and Risk

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In this paper we study two decisions made by an individual. First, the decision to transit from paid and secure employment into risky entrepreneurship and second, the decision about the size or scale of the venture for transitioned entrepreneurs. In doing so, we focus on the risk attitudes and characteristics of the decision makers to analyze the effects of greater risk aversion, wealth increases and stochastic dominant shifts in the distribution of results. Interesting results arise for our comparative static results, where risk aversion, the DARA property and an upper bound for absolute risk aversion coefficient play the key roles in our results.

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  • Claudio A. Bonilla & Marcos Vergara & Richard Watt, 2019. "New Results on Entrepreneurship and Risk," Working Papers in Economics 19/20, University of Canterbury, Department of Economics and Finance.
    • Handle: RePEc:cbt:econwp:19/20
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    More about this item

    Keywords

    Entrepreneurship; Risk Aversion; DARA;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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