Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/103388 
Year of Publication: 
2014
Series/Report no.: 
SOEPpapers on Multidisciplinary Panel Data Research No. 701
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
Empirical studies use the assumption of stability in individual risk attitudes when searching for a relationship between attitude to risk and the decision to become and survive as an entrepreneur. We show that risk attitudes do not remain stable but face endogenous adaption when starting a new business. This adaption is associated with entrepreneurial survival. The results show that entrepreneurs with low risk tolerance before entering self-employment and increased risk tolerance when self-employed have a higher probability of survival than similar entrepreneurs experiencing a decrease in the willingness to take risks. We find the opposite results for entrepreneurs who express a higher willingness to take risks before becoming self-employed: in this case, a decrease in tolerance of risk is correlated with an increasing survival probability.
Subjects: 
Endogenous attitudes
Risk attitudes
Entrepreneurial survival
SOEP
JEL: 
D03
D81
M13
Document Type: 
Working Paper

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