Entrepreneurial Overconfidence: Evidence from a Public Program

Ruffo H and Gonzalez G

Published on: 2019-09-19

Abstract

In this study, we use data taken from a survey of entrepreneurs that participated in a government program of Buenos Aires to provide evidence of entrepreneurial overconfidence. All the applicants are scored and ranked by the program. Although this ranking is common knowledge, we find prevalent overconfidence among applicants: more than 80% of respondents ranked themselves above the median when asked to compare themselves with other participants. Additionally, we show that 60% of entrepreneurs declared that they will perform much better than average in the future, while the results were centered on the average when asked about past performance. Furthermore, the provision of information about other entrepreneurs made respondents tend toward moderate optimism. We discuss the implications of these findings for policies aimed at fostering entrepreneurship.

Keywords

Entrepreneurship; Overconfidence; Motivated beliefs