Over Confidence And Entrepreneurial Choice Under Ambiguity

Entrepreneurship studies have attributed to over-confidence decisions to start a new venture. Many decision situations, through which over-confidence is measured, entail some degrees of uncertainty, (e.g., related to own skill or to competition). The aspect of uncertainty is largely neglected in over-confidence studies or entrepreneurial research. Both uncertainty and over-confidence influence individuals' likelihood perceptions. Nevertheless, these two aspects are seldom jointly investigated, and the little evidence provides inconclusive results. In this study, we experimentally investigate how uncertainty, as a property of the situation, and over-confidence, as a characteristic of decision makers' beliefs, influence choice behavior. Our findings with Executive MBA participants show that over-confident decision makers choose less uncertain options for low likelihood outcomes and more uncertain options for high likelihood outcomes, contrary to neutral confidence decision makers, whose choices are in line with standard Prospect Theory predictions.

Entrepreneurship scholars have resolved that overconfidence may play a role in entrepreneurial decisions. Although informative, extant research offers limited explanations on the mechanisms through which overconfidence contributes to the observed behavior. Moreover, important aspects of uncertainty and ambiguity, quintessential in entrepreneurial activity, are nearly neglected, and most studies focus on risk. My dissertation investigates entrepreneurs' attitudes towards ambiguity and the impact of overconfidence. Given this goal, I employ modern ambiguity theories and design several experiments, each aimed at responding to a precise research question, contributing to the grand theme of the manuscript. Findings suggest that overconfidence enhances decision makers' proneness to ambiguity, and both phenomena are context-related and likelihood dependent. I also find that entrepreneurs are more optimistic than non- entrepreneurs when deciding both under risk and ambiguity. Yet, entrepreneurs are more pessimistic under ambiguity compared to risk, while non-entrepreneurs do not discriminate between the two. The contribution of my work consists in bringing entrepreneurs where they belong: deciding under ambiguity... in the laboratory or in the wild.

A sizable gap exists between the ample demands for (and growing supply of) entrepreneurship education and our understanding of how to best approach the teaching and learning of entrepreneurship. To help close this gap, the United States Association for

This book introduces a new perspective on risk seeking behaviour, developing a framework based on various cognitive theories, and applying it to the specific case-study of Turkey’s foreign policy toward Syria. The author examines why policy makers commit themselves to polices that they do not have the capacity to deliver, and develops an alternative theoretical model to prospect theory in explaining risk taking behaviour based on the concept of overconfidence. The volume suggests that overconfident individuals exhibit risk seeking behaviour that contradicts the risk averse behaviour of individuals in the domain of gain, as predicted by prospect theory. Using a set of testable hypothesis deduced from the model, it presents an empirical investigation of the causes behind Turkish decision makers’ unprecedented level of risk taking toward the uprising in Syria and the consequences of this policy.

Learning about entrepreneurship has major implications for the way we understand economic change and progress. At a time when governments all over the world look to entrepreneurship as a way to increase the wealth and well-being of their countries, The Dynamics of Entrepreneurship examines the causes of differences in entrepreneurial propensity between individuals, the factors that explain variations in the type and quantity of entrepreneurship at the aggregate level, and the macroeconomic implications of entrepreneurship. Using Global Entrepreneurship Monitor (GEM) data, the book brings together contributions from leading scholars to provide a comprehensive overview of current scholarship on entrepreneurial activity. Discussed topics include entrepreneurial motivation, gender and migration, entrepreneurial financing, urban entrepreneurship, growth-oriented entrepreneurship, economic growth, and regional entrepreneurship policies. The book concludes by summarizing its contribution to existing literature, with particular attention paid to the policy implications and the ongoing debate on entrepreneurship.

This book presents a review of the role of overconfidence in small firms and explores how biased judgment and decision-making can affect business performance. Whilst the overconfidence construct has been studied in detail, there are no systematic reviews of its role in SMEs as of yet. Examining the decisions made by entrepreneurs, this study offers clear solutions on how to improve business accuracy, reduce disadvantageous investments and prevent bankruptcy. Providing an empirical analysis of overconfidence in the sport industry, this new book will not only be of interest to academics of entrepreneurship and small enterprises, but also to sport managers.

Behavioral strategy continues to attract increasing research interest within the broader field of strategic management. Research in behavioral strategy has clear scope for development in tandem with such traditional streams of strategy research that involve economics, markets, resources, and technology. The key roles of psychology, organizational behavior, and behavioral decision making in the theory and practice of strategy have yet to be comprehensively grasped. Given that strategic thinking and strategic decision making are importantly concerned with human cognition, human decisions, and human behavior, it makes eminent sense to bring some balance in the strategy field by complementing the extant emphasis on the “objective” economics-based view with substantive attention to the “subjective” individual-oriented perspective. This calls for more focused inquiries into the role and nature of the individual strategy actors, and their cognitions and behaviors, in the strategy research enterprise. For the purposes of this book series, behavioral strategy would be broadly construed as covering all aspects of the role of the strategy maker in the entire strategy field. The scholarship relating to behavioral strategy is widely believed to be dispersed in diverse literatures. These existing contributions that relate to behavioral strategy within the overall field of strategy has been known and perhaps valued by most scholars all along, but were not adequately appreciated or brought together as a coherent sub-field or as a distinct perspective of strategy. This book series on Research in Behavioral Strategy will cover the essential progress made thus far in this admittedly fragmented literature and elaborate upon fruitful streams of scholarship. More importantly, the book series will focus on providing a robust and comprehensive forum for the growing scholarship in behavioral strategy. In particular, the volumes in the series will cover new views of interdisciplinary theoretical frameworks and models (dealing with all behavioral aspects), significant practical problems of strategy formulation, implementation, and evaluation, and emerging areas of inquiry. The series will also include comprehensive empirical studies of selected segments of business, economic, industrial, government, and non-profit activities with potential for wider application of behavioral strategy. Through the ongoing release of focused topical titles, this book series will seek to disseminate theoretical insights and practical management information that will enable interested professionals to gain a rigorous and comprehensive understanding of the subject of behavioral strategy. Entrepreneurship and Behavioral Strategy contains contributions by leading scholars in the field of entrepreneurship with an interest in researching behavioral perspectives. The 10 chapters in this volume deal with a number of significant issues relating broadly to the behavioral aspects of entrepreneurship, covering topics such as entrepreneurial process orientation, a machine learning approach to reviewing the intersection of the entrepreneurship and behavioral strategy literatures, the temporalities of entrepreneurial risk behavior, entrepreneurs under ambiguity, disruptive business model innovations, international attention, entrepreneurial team formation, building alliances in new and small ventures, the role of insight in entrepreneurial action, and the effects of foreign competition on entrepreneurship activities. The chapters include empirical as well as conceptual treatments of the selected topics, and collectively present a wide-ranging review of the noteworthy research perspectives on the confluence of entrepreneurship and behavioral strategy.

The need to understand the theories and applications of economic and finance risk has been clear to everyone since the financial crisis, and this collection of original essays proffers broad, high-level explanations of risk and uncertainty. The economics of risk and uncertainty is unlike most branches of economics in spanning from the individual decision-maker to the market (and indeed, social decisions), and ranging from purely theoretical analysis through individual experimentation, empirical analysis, and applied and policy decisions. It also has close and sometimes conflicting relationships with theoretical and applied statistics, and psychology. The aim of this volume is to provide an overview of diverse aspects of this field, ranging from classical and foundational work through current developments. Presents coherent summaries of risk and uncertainty that inform major areas in economics and finance Divides coverage between theoretical, empirical, and experimental findings Makes the economics of risk and uncertainty accessible to scholars in fields outside economics

This book presents the definitive exposition of 'prospect theory', a compelling alternative to the classical utility theory of choice. Building on the 1982 volume, Judgement Under Uncertainty, this book brings together seminal papers on prospect theory from economists, decision theorists, and psychologists, including the work of the late Amos Tversky, whose contributions are collected here for the first time. While remaining within a rational choice framework, prospect theory delivers more accurate, empirically verified predictions in key test cases, as well as helping to explain many complex, real-world puzzles. In this volume, it is brought to bear on phenomena as diverse as the principles of legal compensation, the equity premium puzzle in financial markets, and the number of hours that New York cab drivers choose to drive on rainy days. Theoretically elegant and empirically robust, this volume shows how prospect theory has matured into a new science of decision making.