Risk Worth Taking - Entrepreneurial Behaviour When Faced with Risk and Uncertainty: A Lab Experiment

    Research output: Contribution to conferencePaperResearchpeer-review

    Abstract

    Are entrepreneurial-oriented individuals different from others in their propensities to take risk and uncertainty? Entrepreneurial-oriented individuals are defined as individuals that show entrepreneurial intentions - the cognitive state that precedes the decision to form a new venture. Cognitive theory suggests differences in risk taking due to individual characteristics. However, entrepreneurship theory did not provide empirical support for such differences. Using data from a laboratory experiment with simple money games, we observe how individuals from two different groups (entrepreneurial-oriented, non-entrepreneurial-oriented) react to different degrees of risk and uncertainty when real monetary incentives are involved in each decision. The analysis reveals significant differences between entrepreneurial and non-entrepreneurial-oriented individuals in their decision making. In particular, entrepreneurial-oriented individuals appear to be more sensitive towards a “house money effect” (increased risk seeking in the presence of a prior gain) and less sensitive towards a “risk propensity effect” (reduced risk avoidance in the presence of increasing degrees of risk). These results have fundamental implications for the understanding of cognitive factors guiding entrepreneurial decision-making.
    Original languageEnglish
    Publication date2015
    Number of pages16
    Publication statusPublished - 2015
    EventDRUID Academy Conference 2015 - Hotel Comwell Sport Rebild Bakker, Aalborg, Denmark
    Duration: 21 Jan 201523 Jan 2015
    Conference number: 36
    http://druid8.sit.aau.dk/druid/registrant/index/login/cid/17

    Conference

    ConferenceDRUID Academy Conference 2015
    Number36
    LocationHotel Comwell Sport Rebild Bakker
    CountryDenmark
    CityAalborg
    Period21/01/201523/01/2015
    Internet address

    Cite this