Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/114114
Authors: 
Dawson, Christopher
de Meza, David Emmanuel
Henley, Andrew
Arabsheibani, Reza
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 9242
Abstract: 
Developing further the accumulating evidence that self-employment attracts optimists, this paper investigates the relationship between earnings and prior optimism. It finds that self-employed optimists earn less than self-employed realists. Amongst employees, optimists earn more. These results are consistent with biased expectations leading to entry errors. As a test of validity, we find that amongst the married, future divorcees have higher financial expectations but their realisations are no worse, suggesting our optimism measure captures an intrinsic psychological trait associated with rash decisions.
Subjects: 
financial optimism
expectations
self-employment
JEL: 
D84
M13
Document Type: 
Working Paper

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