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Aspirations, Prospect Theory and Entrepreneurship: Evidence from Colombia

Author

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  • Francesco Bogliacino
  • Iv�n Gonz�lez Gallo

Abstract

In this article we test the main hypotheses of the behavioural theory of entrepreneurship, namely that risk preferences are reference-dependent, that entrepreneurs are not ambiguity-averse and that aspirations act as a reference point in the sense postulated by Prospect Theory. We use an experimental methodology to elicit risk preferences and we manipulate aspirations by means of a psychological priming technique to guarantee exogenous variation of the independent variable. We also assess the relationship between risk preferences and correlates at the firm and individual level. Although causality cannot be established, as expected the risk preferences are mainly related with individual characteristics. If we look at the relationship between biases and firm performance we see some effect of loss aversion in interaction with personality traits (locus of control) and level of risk propensity. Our experimental fieldwork has been conducted in Colombia.

Suggested Citation

  • Francesco Bogliacino & Iv�n Gonz�lez Gallo, 2015. "Aspirations, Prospect Theory and Entrepreneurship: Evidence from Colombia," Documentos de Trabajo, Escuela de Economía 12652, Universidad Nacional de Colombia, FCE, CID.
    • Handle: RePEc:col:000178:012652
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    File URL: http://www.fce.unal.edu.co/centro-editorial/docs/escuela-de-economia/59-aspirations-prospect-theory-and-entrepreneurship-evidence-from-colombia
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    Cited by:

    1. Bayer, Péter & Guerdjikova, Ani, 2024. "Optimism leads to optimality: Ambiguity in network formation," Journal of Economic Dynamics and Control, Elsevier, vol. 168(C).
    2. Shaoze Jin & Xiangping Jia & Harvey S. James, 2021. "Risk attitudes within farmer cooperative organizations: Evidence from China's fresh apple industry," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 92(2), pages 173-205, June.
    3. Carpenter, Jeffrey & Hans Matthews, Peter & Robbett, Andrea, 2017. "Compensating differentials in experimental labor markets," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 69(C), pages 50-60.
    4. Chivers, David, 2017. "Success, survive or escape? Aspirations and poverty traps," Journal of Economic Behavior & Organization, Elsevier, vol. 143(C), pages 116-132.
    5. M. M. Sulphey & Martin Klepek, 2024. "A Study on the Antecedents of Individual Entrepreneurship Orientation of Female Students: An Examination Using Structural Equation Modeling," SAGE Open, , vol. 14(2), pages 21582440241, May.

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    Keywords

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    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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