Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/57829
Authors: 
Fossen, Frank M.
Year of Publication: 
2012
Series/Report no.: 
School of Business & Economics, Discussion Paper: Economics 2012/11
Abstract: 
Why do people engage in entrepreneurship and commit large parts of their personal wealth to their business, despite comparably low returns and high risk? This paper connects several streams of literature to shed some light on this puzzle and suggests possible future research avenues. Key insights from the literature are that entrepreneurs may operate in imperfect financial markets and that entrepreneurs are less risk-averse than the rest of the population. A focus of this paper is, therefore, on the role of heterogeneous risk attitudes in entrepreneurial decisions, specifically portfolio choice and the entry and exit decisions. Nonpecuniary benefits of entrepreneurship, such as being independent in the workplace, also contribute to an explanation of entrepreneurial behavior.
Subjects: 
entrepreneurship
risk aversion
portfolio choice
JEL: 
J23
G11
L26
Document Type: 
Working Paper

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