Entrepreneurial Risk and Market Entry

@article{Wu2006EntrepreneurialRA,
  title={Entrepreneurial Risk and Market Entry},
  author={Brian Wu and Anne Marie Knott},
  journal={Management Science},
  year={2006},
  volume={52},
  pages={1315-1330}
}
This paper attempts to reconcile the risk-bearing characterization of entrepreneurs with the stylized fact that entrepreneurs exhibit conventional risk aversion profiles. We propose that the disparity arises from confounding two distinct dimensions of uncertainty: demand uncertainty and ability uncertainty. We further propose that entrepreneurs will be risk averse with respect to demand uncertainty, yet “risk-seeking” (or overconfident) with respect to ability uncertainty. To examine this view… CONTINUE READING

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