Overoptimism among Founders: The Role of Information and Motivation
This study empirically investigates factors that influence overoptimism across nascent entrepreneurs. We distinguish between two main groups of determinants (information, motivation) and three types of overoptimism (income, psychological burden, leisure time). Findings indicate that entrepreneurs who have relevant business information are more realistic and that entrepreneurs with a high level of general knowledge, acquired through education or previous (unrelated) entrepreneurial experience, are more overoptimistic. External advice and business planning do not appear to limit subsequent overoptimism. Entrepreneurs are less overoptimistic about the pecuniary or non-pecuniary benefits of self-employment when these benefits are closely related to the initial motivation for starting up the business.
|Date of creation:||03 Mar 2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 31-10-408 1182
Fax: 31-10-408 9020
Web page: http://www.erim.eur.nl/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Amit, Raphael & MacCrimmon, Kenneth R. & Zietsma, Charlene & Oesch, John M., 2001. "Does money matter?: Wealth attainment as the motive for initiating growth-oriented technology ventures," Journal of Business Venturing, Elsevier, vol. 16(2), pages 119-143, March.
- Koellinger, Philipp & Minniti, Maria & Schade, Christian, 2007.
""I think I can, I think I can": Overconfidence and entrepreneurial behavior,"
Journal of Economic Psychology,
Elsevier, vol. 28(4), pages 502-527, August.
- Philipp Köllinger & Maria Minniti & Christian Schade, 2005. ""I Think I Can, I Think I Can": Overconfidence and Entrepreneurial Behavior," Discussion Papers of DIW Berlin 501, DIW Berlin, German Institute for Economic Research.
- Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June.
- Palich, Leslie E. & Ray Bagby, D., 1995. "Using cognitive theory to explain entrepreneurial risk-taking: Challenging conventional wisdom," Journal of Business Venturing, Elsevier, vol. 10(6), pages 425-438, November.
- Douglas, Evan J. & Shepherd, Dean A., 2000. "Entrepreneurship as a utility maximizing response," Journal of Business Venturing, Elsevier, vol. 15(3), pages 231-251, May.
- Mathew L. A. Hayward & Dean A. Shepherd & Dale Griffin, 2006. "A Hubris Theory of Entrepreneurship," Management Science, INFORMS, vol. 52(2), pages 160-172, February.
- de Meza, David & Southey, Clive, 1996.
"The Borrower's Curse: Optimism, Finance and Entrepreneurship,"
Royal Economic Society, vol. 106(435), pages 375-86, March.
- De Meza, D. & Southey, C., 1995. "The Borrower's Curse: Optimism, Finance and Enterpreneurship," Discussion Papers 9502, Exeter University, Department of Economics.
- Daniel Kahneman & Dan Lovallo, 1993. "Timid Choices and Bold Forecasts: A Cognitive Perspective on Risk Taking," Management Science, INFORMS, vol. 39(1), pages 17-31, January.
- Wing Suen, 2004. "The Self-Perpetuation of Biased Beliefs," Economic Journal, Royal Economic Society, vol. 114(495), pages 377-396, 04.
- Puri, Manju & Robinson, David T., 2007.
"Optimism and economic choice,"
Journal of Financial Economics,
Elsevier, vol. 86(1), pages 71-99, October.
- Frank, Murray Z, 1988. "An Intertemporal Model of Industrial Exit," The Quarterly Journal of Economics, MIT Press, vol. 103(2), pages 333-44, May.
- Busenitz, Lowell W. & Barney, Jay B., 1997. "Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision-making," Journal of Business Venturing, Elsevier, vol. 12(1), pages 9-30, January.
- Forbes, Daniel P., 2005. "Are some entrepreneurs more overconfident than others?," Journal of Business Venturing, Elsevier, vol. 20(5), pages 623-640, September.
- Sarasvathy, Saras D., 2003. "Entrepreneurship as a science of the artificial," Journal of Economic Psychology, Elsevier, vol. 24(2), pages 203-220, April.
- Yang, Sha & Markoczy, Livia & Qi, Min, 2007. "Unrealistic optimism in consumer credit card adoption," Journal of Economic Psychology, Elsevier, vol. 28(2), pages 170-185, April.
- Carree, Martin A. & Nijkamp, Joyce, 2001. "Deregulation in retailing: the Dutch experience," Journal of Economics and Business, Elsevier, vol. 53(2-3), pages 225-235.
- Wright, Mike & Robbie, Ken & Ennew, Christine, 1997. "Venture capitalists and serial entrepreneurs," Journal of Business Venturing, Elsevier, vol. 12(3), pages 227-249, May.
- Ulrike Malmendier & Geoffrey Tate, 2005.
"CEO Overconfidence and Corporate Investment,"
Journal of Finance,
American Finance Association, vol. 60(6), pages 2661-2700, December.
- Sarasvathy, D. K. & Simon, Herbert A. & Lave, Lester, 1998. "Perceiving and managing business risks: differences between entrepreneurs and bankers," Journal of Economic Behavior & Organization, Elsevier, vol. 33(2), pages 207-225, January.
- Brad M. Barber & Terrance Odean, 2001. "Boys Will Be Boys: Gender, Overconfidence, And Common Stock Investment," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 261-292, February.
- Cooper, Arnold C. & Woo, Carolyn Y. & Dunkelberg, William C., 1988. "Entrepreneurs' perceived chances for success," Journal of Business Venturing, Elsevier, vol. 3(2), pages 97-108.
- Madsen, Jakob Brochner, 1994. "Tests of rationality versus an "over optimist" bias," Journal of Economic Psychology, Elsevier, vol. 15(4), pages 587-599, December.
- Robert A. Lowe & Arvids A. Ziedonis, 2006. "Overoptimism and the Performance of Entrepreneurial Firms," Management Science, INFORMS, vol. 52(2), pages 173-186, February.
- Stuart Fraser & Francis J. Greene, 2006. "The Effects of Experience on Entrepreneurial Optimism and Uncertainty," Economica, London School of Economics and Political Science, vol. 73(290), pages 169-192, 05.
- Dan Lovallo & Colin Camerer, 1999. "Overconfidence and Excess Entry: An Experimental Approach," American Economic Review, American Economic Association, vol. 89(1), pages 306-318, March.
- Becker, Gary S, 1993. "Nobel Lecture: The Economic Way of Looking at Behavior," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 385-409, June.
- Davidsson, Per & Honig, Benson, 2003. "The role of social and human capital among nascent entrepreneurs," Journal of Business Venturing, Elsevier, vol. 18(3), pages 301-331, May.
- Wellington, Alison J., 2006. "Self-employment: the new solution for balancing family and career?," Labour Economics, Elsevier, vol. 13(3), pages 357-386, June.
When requesting a correction, please mention this item's handle: RePEc:ems:eureri:11557. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RePub)
If references are entirely missing, you can add them using this form.