Curb your enthusiasm: optimistic entrepreneurs earn less

de Meza, David, Dawson, Christopher, Henley, Andrew ORCID: https://orcid.org/0000-0003-4057-1679 and Arabsheibani, G. Reza 2019. Curb your enthusiasm: optimistic entrepreneurs earn less. European Economic Review 111 , pp. 53-69. 10.1016/j.euroecorev.2018.08.007

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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
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Publisher:	Elsevier
ISSN:	0014-2921
Date of First Compliant Deposit:	12 September 2018
Date of Acceptance:	30 August 2018
Last Modified:	17 Nov 2024 16:00
URI:	https://orca.cardiff.ac.uk/id/eprint/114806

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