Corpus ID: 2172997

On the Evolution of Overconé dence and Entrepreneurs

  title={On the Evolution of Overcon{\'e} dence and Entrepreneurs},
  author={Antonio E. Bernardo and Ivo Welch},
This paper explains why seemingly irrational overcone dent behavior can persist. Information aggregation is poor in groups in which most individuals herd. By ignoring the herd, the actions of overcone dent individuals (“ entrepreneurs” ) convey their private information. However, entrepreneurs make mistakes and thus die more frequently. The socially optimal proportion of entrepreneurs trades off the positive information externality against high attrition rates of entrepreneurs, and depends on… Expand
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