Entrepreneurial overconfidence and ambiguity aversion: dealing with the devil you know,than the devil you don't know |
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| Authors: | Desmond Ng |
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| Institution: | 1. Agribusiness and Strategic Management, Department of Agricultural Economics, Texas A&2. M University, 600 John Kimbrough Blvd., 377 Agriculture and Life Sciences Building, College Station, TX, USAdng@ag.tamu.edu |
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| Abstract: | Various empirical studies find that entrepreneurs are systematically overconfident in their venture's probabilistic chances of success. Yet, entrepreneurs often face an ambiguous future that precludes them from making such probabilistic judgements. A theoretical framework based on ambiguity aversion is developed to explain an entrepreneur's overconfidence under complex and novel conditions of ambiguity. Unlike optimistic explanations, this ambiguity-averse form of overconfidence offers a non-probabilistic approach to entrepreneurial judgements of uncertainty. |
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| Keywords: | ambiguity aversion cognitive/biases |
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