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They want what I want: User entrepreneurship, egocentric bias, and overconfidence in early-stage entrepreneurial decision-making

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  • Livia Boerner

    (Paderborn University)

Abstract

User entrepreneurship is the phenomenon of entrepreneurs developing and commercializing a business idea to fulfil their own subjective need. The paper explores this phenomenon with a focus on understanding its downsides linked to egocentric bias and overconfidence. For this study, a research team coded and analyzed N = 553 pitches of early-stage startups in the pitch competition Die Höhle der Löwen. Controlling for a range of covariates, results suggests that end-user entrepreneurs systematically overestimate the valuation of their business idea compared to others, indicating egocentrically biased and overconfident market entry decisions. Correspondingly, they are less likely to secure funding from investors and obtain significantly lower business valuations overall. These findings complement the literature on pitch competitions, early access to funding and bias in entrepreneurial decision-making.

Suggested Citation

  • Livia Boerner, 2024. "They want what I want: User entrepreneurship, egocentric bias, and overconfidence in early-stage entrepreneurial decision-making," Working Papers Dissertations 121, Paderborn University, Faculty of Business Administration and Economics.
    • Handle: RePEc:pdn:dispap:121
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    File URL: http://groups.uni-paderborn.de/wp-wiwi/RePEc/pdf/dispap/DP121.pdf
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    More about this item

    Keywords

    User entrepreneurship; Opportunity recognition; Overconfidence; Egocentric bias; Televised startup pitches;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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