Dawson, Christopher, de Meza, David 
ORCID: 0000-0002-5638-8310, Henley, Andrew and Arabsheibani, G. Reza
(2019)
Curb your enthusiasm: optimistic entrepreneurs earn less.
European Economic Review, 111.
pp. 53-69.
ISSN 0014-2921
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Abstract
This paper concerns the implications of biased beliefs on entrepreneurial earnings. Amongst self-employed business owners, income is decreasing in optimism measured whilst still an employee. Controlling for earnings in paid employment, self-employment earnings of those with optimism above the mean are some 30% less than those with optimism below the mean. For employees, it is optimists that have higher earnings. These and associated results suggest that mistaken expectations lead to entry errors. As a test of external validity, future divorcees turn out to be financial optimists, indicating our measure captures an intrinsic psychological trait associated with rash decisions.
| Item Type: | Article |
|---|---|
| Official URL: | https://www.journals.elsevier.com/european-economi... |
| Additional Information: | © 2018 Elsevier B.V. |
| Divisions: | Management |
| Subjects: | H Social Sciences > HF Commerce > HF5601 Accounting H Social Sciences > HG Finance |
| JEL classification: | D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D84 - Expectations; Speculations M - Business Administration and Business Economics; Marketing; Accounting > M1 - Business Administration > M13 - Entrepreneurship |
| Date Deposited: | 26 Sep 2018 10:19 |
| Last Modified: | 17 Nov 2024 01:48 |
| URI: | http://eprints.lse.ac.uk/id/eprint/90264 |
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