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Abstract:
Empirical evidence supports the conventional wisdom that entrepreneurs are more optimistic and overconfident than others. However, the same holds true for top managers. In this lab-in-the- field experiment we directly compare the scores of entrepreneurs, managers and employees on a comprehensive set of measures of optimism and overconfidence (n = 2,404). The results show that on average entrepreneurs and managers are more optimistic than employees in their dispositional optimism and explanatory style of past events. For an incentivized measure of overconfidence we find no difference between entrepreneurs and managers, who both are more likely to overestimate their own abilities compared to employees. Finally, exploration of within-group heterogeneity shows that these observations hold true for various sub-groups of entrepreneurs and managers. We conclude that optimism and overconfidence are indeed characteristics of entrepreneurs, but they are not unique when compared to (top) managers."
