Entrepreneurial Success and Failure: Confidence and Fallible Judgment

• 成果类型: Article
• 署名作者: Hogarth, Robin M.; Karelaia, Natalia
• 署名单位: Pompeu Fabra University; ICREA; INSEAD Business School
• 刊物名称: ORGANIZATION SCIENCE
• ISSN/ISSBN: 1047-7039
• DOI: 10.1287/orsc.1110.0702
• 发表日期: 2012
• 页码: 1733-1747
• 关键词: excess entry; fallible judgment; overconfidence; bounded rationality; entrepreneurship

摘要

Excess entry or the high failure rate of market entry decisions is often attributed to overconfidence exhibited by entrepreneurs. Assuming that these decisions depend on assessments of business opportunities, we model boundedly rational entrepreneurs and show analytically that, whereas excess entry is an inevitable consequence of imperfect judgment, it does not necessarily imply overconfidence. Indeed, judgmental fallibility can lead to excess entry even when all potential entrepreneurs are underconfident. We further demonstrate that, as a group, individuals who decide to start a new business exhibit more confidence than those who do not and that successful entrants are less confident than failures. Our results therefore question general claims that overconfidence leads to excess entry. We conclude by emphasizing the need to understand the role of judgmental fallibility in producing economic outcomes and implications for both venture capitalists and the training of entrepreneurs.