Aspirations, Prospect Theory and Entrepreneurship: Evidence from Colombia

Documentos FCE-CID Escuela de Economía No. 59

56 Pages Posted: 28 Mar 2015

See all articles by Francesco Bogliacino

Francesco Bogliacino

National University of Colombia - Department of Economics

Ivan Gonzalez Gallo

Fundación Universitaria Konrad Lorenz

Date Written: March 19, 2015

Abstract

In this article we test the main hypotheses of the behavioural theory of entrepreneurship, namely that risk preferences are reference-dependent, that entrepreneurs are not ambiguity-averse and that aspirations act as a reference point in the sense postulated by Prospect Theory. We use an experimental methodology to elicit risk preferences and we manipulate aspirations by means of a psychological priming technique to guarantee exogenous variation of the independent variable. We also assess the relationship between risk preferences and correlates at the firm and individual level. Although causality cannot be established, as expected the risk preferences are mainly related with individual characteristics. If we look at the relationship between biases and firm performance we see some effect of loss aversion in interaction with personality traits (locus of control) and level of risk propensity. Our experimental fieldwork has been conducted in Colombia.

Keywords: Experiments, Prospect Theory, Aspirations, Entrepreneurship

JEL Classification: C93; D81; L26; O54

Suggested Citation

Bogliacino, Francesco and Gonzalez Gallo, Ivan, Aspirations, Prospect Theory and Entrepreneurship: Evidence from Colombia (March 19, 2015). Documentos FCE-CID Escuela de Economía No. 59, Available at SSRN: https://ssrn.com/abstract=2585665 or http://dx.doi.org/10.2139/ssrn.2585665

Francesco Bogliacino (Contact Author)

National University of Colombia - Department of Economics ( email )

Carrera 30 Calle 45 Ciudad Universitaria
Bogotá
Colombia

Ivan Gonzalez Gallo

Fundación Universitaria Konrad Lorenz ( email )

Carrera 9Bis, No 62-43
Bogotá
Colombia

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