scholarly journals Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics

2014 ◽  
Vol 28 (3) ◽  
pp. 49-70 ◽  
Author(s):  
Thomas Åstebro ◽  
Holger Herz ◽  
Ramana Nanda ◽  
Roberto A. Weber
Keyword(s):  
Economic Theory ◽  
Risk Aversion ◽  
Behavioral Economics ◽  
Probability Distributions ◽  
Low Risk ◽  
Entrepreneurial Activity ◽  
Potential Importance ◽  
Behavioral Biases ◽  
Growing Body ◽  
Intuitive Interpretation

There is a growing body of evidence that many entrepreneurs seem to enter and persist in entrepreneurship despite earning low risk-adjusted returns. This has lead to attempts to provide explanations—using both standard economic theory and behavioral economics— for why certain individuals may be attracted to such an apparently unprofitable activity. Drawing on research in behavioral economics, in the sections that follow, we review three sets of possible interpretations for understanding the empirical facts related to the entry into, and persistence in, entrepreneurship. Differences in risk aversion provide a plausible and intuitive interpretation of entrepreneurial activity. In addition, a growing literature has begun to highlight the potential importance of overconfidence in driving entrepreneurial outcomes. Such a mechanism may appear at face value to work like a lower level of risk aversion, but there are clear conceptual differences—in particular, overconfidence likely arises from behavioral biases and misperceptions of probability distributions. Finally, nonpecuniary taste-based factors may be important in motivating both the decisions to enter into and to persist in entrepreneurship.

Beyond Market: Institutions of Governance in the Complex World (Nobel Memorial Prize in Economics 2009 - Oliver Williamson and Elinor Ostrom)

2010 ◽  
pp. 82-98 ◽  
Author(s):  
Ya. Kuzminov ◽  
M. Yudkevich
Keyword(s):  
Economic Theory ◽  
Behavioral Economics ◽  
Nobel Prize ◽  
Organization Theory ◽  
Development Studies ◽  
Complex World ◽  
Market Institutions ◽  
Institutional Economic

The article surveys the main lines of research conducted by Oliver Williamson and Elinor Ostrom - 2009 Nobel Prize winners in economics. Williamsons and Ostroms contribution to understanding the nature of institutions and choice over institutional options are discussed. The role their work played in evolution of modern institutional economic theory is analyzed in detail, as well as interconnections between Williamsons and Ostroms ideas and the most recent research developments in organization theory, behavioral economics and development studies.

B is for Bias

2014 ◽  
Vol 3 (2) ◽  
pp. 35-47
Author(s):  
Calin Valsan
Keyword(s):  
Economic Theory ◽  
Rational Expectations ◽  
Economic Environment ◽  
Rational Agents ◽  
Economic Agents ◽  
Behavioral Biases ◽  
The Social ◽  
Modern Economic

Standard economic theory assumes rational agents. Individuals are expected to have rational expectations and constantly optimize their choices. Modern economic and financial theory is build under the assumption of rationality. There is plenty of evidence from psychology, however, that individuals are biased and rely heavily on heuristics in order to make decisions. Yet, this is not a mere fluke, a behavioral oddity. Because the social and economic environment in which individuals evolve is complex, behavioral biases represent evolutionary adaptations allowing economic agents to deal with undecidability and computational irreducibility.

The Impact of Corruption on Entrepreneurship

2015 ◽  
pp. 1-13
Author(s):  
Gil Avnimelech ◽  
Yaron Zelekha
Keyword(s):  
Developing Countries ◽  
Literature Review ◽  
Negative Impact ◽  
Developed Countries ◽  
Entrepreneurial Activity ◽  
Negative Effects ◽  
Societal Costs ◽  
Present Evidence ◽  
Growing Body ◽  
The Impact

There is a consensus that corruption may result in high societal costs. A growing body of research reveals the negative effects of corruption on a variety of economic indicators. This chapter presents a literature review on the impact of corruption on entrepreneurship. It allows us to suggest that one of the transition channels through which corruption has impacted growth is entrepreneurship. The main channels in which corruption impacts entrepreneurship is through reduced incentives for entrepreneurial activity and reduced trust within the system. The authors present evidence that the negative impact of an incremental increase in the level of corruption on entrepreneurship is more harmful in developed countries than in developing countries. Thus, they stress the need for more research in this area with the aim of establishing appropriate frameworks for the fight of corruption in both developing and developed countries and suggest significant gains from anti-corruption efforts, especially in developed countries.

Risk Preferences and Incentives for Evidence Acquisition and Disclosure

2020 ◽  
Vol 36 (2) ◽  
pp. 314-342
Author(s):  
Erin Giffin ◽  
Erik Lillethun
Keyword(s):  
Decision Making ◽  
High Risk ◽  
Optimal Design ◽  
Risk Aversion ◽  
Risk Preferences ◽  
Decision Rules ◽  
Low Risk ◽  
Risk Averse ◽  
Good Decision ◽  
Legal Rules

Abstract Civil disputes feature parties with biased incentives acquiring evidence with costly effort. Evidence may then be revealed at trial or concealed to persuade a judge or jury. Using a persuasion game, we examine how a litigant’s risk preferences influence evidence acquisition incentives. We find that high risk aversion depresses equilibrium evidence acquisition. We then study the problem of designing legal rules to balance good decision making against the costs of acquisition. We characterize the optimal design, which differs from equilibrium decision rules. Notably, for very risk-averse litigants, the design is “over-incentivized” with stronger rewards and punishments than in equilibrium. We find similar results for various common legal rules, including admissibility of evidence and maximum awards. These results have implications for how rules could differentiate between high risk aversion types (e.g., individuals) and low risk aversion types (e.g., corporations) to improve evidence acquisition efficiency.

scholarly journals Operation of transport companies in terms of the sustainable growth of the region

2018 ◽  
Vol 239 ◽  
pp. 08013
Author(s):  
Roman Averbukh ◽  
Galina Kononova ◽  
Vsevolod Tsiganov
Keyword(s):  
Human Resource Management ◽  
Behavioral Economics ◽  
Human Resource ◽  
Digital Technologies ◽  
Sustainable Growth ◽  
Living Standards ◽  
Entrepreneurial Activity ◽  
Local Conditions ◽  
Definition Of ◽  
Management Issues

The article highlights the influence of the regional economic entities on the sustainable growth of the region. The nature of effect of the local conditions on the efficiency of the entrepreneurial activity is determined. The definition of sustainable growth of the region is clarified. Transport organizations are taken as a study subject. The main operational results of transport organizations, that are directly related to the living standards, are identified and classified. The extended algorithm for the correspondence between organizations’ efficiency and growth of the region is developed. Priority factors, that aim to increase the performance of transport companies, are determined. These factors include active use of digital technologies in carriage of passengers and cargo traffic as well as application of principles of behavioral economics in human resource management. Issues of behavioral economics are considered from the standpoint of the problem of growth in labor productivity.

scholarly journals When Linda meets Preeti: The Validation of Behavioral Biases in India

2021 ◽  
Author(s):  
Nicholas Calbraith Owsley
Keyword(s):  
University Students ◽  
Behavioral Economics ◽  
Low Income ◽  
Small Subset ◽  
Student Sample ◽  
Population Groups ◽  
Behavioral Bias ◽  
Behavioral Biases ◽  
The Core ◽  
Significant Bias

This paper presents results from an experiment testing 10 of the core biases from the behavioral economics literature amongst two distinct ‘non-WEIRD’ (Western Educated Industrialized Rich and Democratic) population groups: low-income Indians, and university students from an elite Indian university. The study tests for both the existence of the ‘behavioral bias’ for each measure with our ‘non-WEIRD’ sample and tests for heterogeneity across the socioeconomically distinct sub-samples. We find that both sub-samples display significant 'bias' in the majority of tests and across different categories of bias, suggesting that behavioral biases are not peculiar to Western samples. We further find that the patterns of bias are the same for each sub-sample for most measures, but that there are notable exceptions for a small subset of measures. In most of these cases, the student sample, closer to typical samples for this type of research, shows stronger bias than the low-income sample.

scholarly journals Decision-Making, Financial Risk Aversion and Behavioral Biases: The Role of Testosterone and Stress

2017 ◽  
Author(s):  
John R. Nofsinger ◽  
Fernando Patterson ◽  
Corey A. Shank ◽  
Robert T. Daigler
Keyword(s):  
Decision Making ◽  
Risk Aversion ◽  
Financial Risk ◽  
Behavioral Biases

Behavioral Economics

2020 ◽  
pp. 281-298
Author(s):  
Miloš Krstić ◽  
Nebojša Pavlović
Keyword(s):  
Economic Theory ◽  
Social Behavior ◽  
Behavioral Economics ◽  
Human Behavior ◽  
Psychological Research ◽  
Point Of View ◽  
Psychological Dimension ◽  
The Social ◽  
Ancient Times ◽  
State Interference

The idea of the significance of the psychological dimension of human behavior is not new and has existed in the social sciences since ancient times. Accordingly, there is an endeavor to place economic analysis on the foundations of psychological research, which takes its form of expression in economic theory through the affirmation of behavioral economics. The aim of this chapter is to critically analyze various normative research programs in behavioral economics and to consider the importance of alternative concepts, models, and theories from the point of view of improving understanding of real economic and social behavior. The particular value of this chapter lies in affirming the importance of a program of behavioral economics known as new paternalism, which is based on challenging the concept of maximizing rationality and opens a new dimension of understanding the justification of state interference in the sphere of economy and society.

The Impact of Corruption on Entrepreneurship

2015 ◽  
pp. 282-294
Author(s):  
Gil Avnimelech ◽  
Yaron Zelekha
Keyword(s):  
Developing Countries ◽  
Literature Review ◽  
Negative Impact ◽  
Developed Countries ◽  
Entrepreneurial Activity ◽  
Negative Effects ◽  
Societal Costs ◽  
Present Evidence ◽  
Growing Body ◽  
The Impact

There is a consensus that corruption may result in high societal costs. A growing body of research reveals the negative effects of corruption on a variety of economic indicators. This chapter presents a literature review on the impact of corruption on entrepreneurship. It allows us to suggest that one of the transition channels through which corruption has impacted growth is entrepreneurship. The main channels in which corruption impacts entrepreneurship is through reduced incentives for entrepreneurial activity and reduced trust within the system. The authors present evidence that the negative impact of an incremental increase in the level of corruption on entrepreneurship is more harmful in developed countries than in developing countries. Thus, they stress the need for more research in this area with the aim of establishing appropriate frameworks for the fight of corruption in both developing and developed countries and suggest significant gains from anti-corruption efforts, especially in developed countries.

scholarly journals Institutional (Dis)Incentives to Innovate: An Explanation for Singapore's Innovation Gap

2009 ◽  
Vol 9 (2) ◽  
pp. 291-319 ◽  
Author(s):  
Richard W. Carney ◽  
Loh Yi Zheng
Keyword(s):  
Risk Aversion ◽  
Statistical Tests ◽  
Institutional Arrangements ◽  
Innovative Activity ◽  
Entrepreneurial Activity ◽  
Per Capita Gdp ◽  
Conventional View ◽  
The World ◽  
Per Capita ◽  
The City

Despite having the fifth highest per capita GDP in the world (according to IMF PPP statistics for 2007), and despite numerous government efforts to spur innovation, Singapore has faced difficulties in establishing a durable base of entrepreneurial activity. Many ascribe this failure to the city-state's policies, which are often portrayed as generating a culture of risk aversion and a lack of creativity. In contrast to this conventional view, this article argues that the city-state's institutional arrangements generate conflicting innovation incentives and ultimately undermine innovative activity. Statistical tests across twenty-three countries offer evidence that is consistent with this argument.

Sign in / Sign up

Export Citation Format

Share Document