Where is the Risk? Availability, Anchoring, and Framing Effects on Entrepreneurial Risk Taking

Babson College Entrepreneurship Research Conference (BCERC) 2007

Frontiers of Entrepreneurship Research 2007

15 Pages Posted: 6 Dec 2007

See all articles by Saulo D. Barbosa

Saulo D. Barbosa

EM Lyon; CERAG - University of Grenoble II

Alain Fayolle

CERAG - INPG; EMLYON Business School - Entrepreneurship Research Centre

Abstract

Although research has emphasized cognition and the use of heuristics and biases by entrepreneurs, the process by which available information influences one's decision to start a business has yet to be clarified. In this study, we test a model where changes in the available information concerning a new venture impact the perceived risk associated with this venture - ultimately affecting the decision to start it. In our model, two important heuristics influence risk perception and bias decision making: availability and anchoring. Moreover, we suggest that these heuristics have opposite effects, depending on whether the available information is framed in positive or negative terms. Results reveal how different combinations of judgmental heuristics and problem framing may stimulate or inhibit entrepreneurial behavior.

Keywords: Entrepreneurship

JEL Classification: M13

Suggested Citation

Barbosa, Saulo D. and Fayolle, Alain, Where is the Risk? Availability, Anchoring, and Framing Effects on Entrepreneurial Risk Taking. Babson College Entrepreneurship Research Conference (BCERC) 2007; Frontiers of Entrepreneurship Research 2007. Available at SSRN: https://ssrn.com/abstract=1064121

Saulo D. Barbosa (Contact Author)

EM Lyon ( email )

23 Ave Guy de Collongue
Ecully, 69134
France

CERAG - University of Grenoble II ( email )

150 rue de la Chimie, BP47
Grenoble
France

Alain Fayolle

CERAG - INPG ( email )

150 rue de la Chimie, BP47
GRENOBLE CEDEX, 38040
France

EMLYON Business School - Entrepreneurship Research Centre

23 Avenue Guy de Collongue
Écully, 69130
France

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