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Entrepreneurs’ Overoptimism During The Early Life Course Of The Firm

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  • Z.V. Kambourova
  • F.C. Stam

Abstract

Recent research on cognitive biases in decision making suggests that over-optimism critically influences entrepreneurs’ decisions to establish and sustain new firms. This paper looks at entrepreneurs’ over-optimism during the early life course of the firm, in order to uncover the dynamics and persistence of over-optimism. We use a representative sample of start-ups in the Netherlands, which we divide into solo self-employed and employer firms. We find that while there is a persistence of over-optimism for the solo self-employed, namely initial over-optimist are more likely to be overoptimistic in subsequent periods; this is not the case for the employer firms.

Suggested Citation

  • Z.V. Kambourova & F.C. Stam, 2016. "Entrepreneurs’ Overoptimism During The Early Life Course Of The Firm," Working Papers 16-14, Utrecht School of Economics.
    • Handle: RePEc:use:tkiwps:1614
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    References listed on IDEAS

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    Keywords

    over-optimism; entrepreneurship; learning; risk-propensity; biases; early life course of the firm; firm growth;
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