Publication type
Journal Article
Authors
Publication date
September 26, 2018
Summary:
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.
Published in
European Economic Review
DOI
https://doi.org/10.1016/j.euroecorev.2018.08.007
Subjects
Notes
Online Early
#525294
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