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701 Entry into Entrepreneurship, Endogenous Adaption of Risk Attitudes and Entrepreneurial Survival Matthias Brachert, Walter Hyll, Mirko Titze 2014 28 S.

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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.

JEL-Classification:

D03;D81;M13

Keywords:

Endogenous attitudes, Risk attitudes, Entrepreneurial survival, SOEP