Year: 2007
Type: article
Study design: Observational Study
Abstract: This research examines the affect of overconfidence on the entrepreneurial investment choices of individuals. We argue that individual overconfidence is associated with more aggressive entrepreneurial investment decisions. We show that the propensity of an individual to begin startup activities is positively associated with the individual's level of overconfidence. Furthermore, overconfidence increases the likelihood of a nascent entrepreneur creating an operating business from her startup activity. These results are significant even when controlling for other known characteristics associated with the tendency to undertake entrepreneurial venturing. We investigated decisions related to venture funding and human capital investment in the venture, and investment risk but did not find that overconfidence was significantly related to these choices.
Author: Henry L. Friedman
Institution: University of Pennsylvania
Language: English
Subfield: Management of Technology and Innovation
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1567761370