Abstract

The high failure rates of business start-ups and low average returns of self-employment suggest that too many people become entrepreneurs. Part of this excess market entry is thought to result from overconfidence in future entrepreneurial success: it is argued that entrepreneurs are more prone to overconfidence than wage-workers. Establishing overconfidence as a driver of entrepreneurial activity using field data is challenging because statements about the relative level of overconfidence among entrepreneurs versus non-entrepreneurs ideally require representative population samples, and the direction of causality between occupational choice and self-perception is difficult to determine.

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