Abstract

Do entrepreneurs perceive risk differently than non-entrepreneurs when choosing between investment prospects? Individuals’ perception of risk is consistently identified as a key variable influencing both opportunity evaluation – a driver of self-selection into entrepreneurship – and choices under risk. Yet, research on risk perception in entrepreneurship is relatively scarce. Recent contributions have focused on mechanisms that affect entrepreneurs’ opportunity evaluation both positively (e.g. desirability of investment outcomes) and negatively (e.g. investment risk). We test on whether risk perception differs between entrepreneurs and non-entrepreneurs when two mechanisms are at play. In particular, we hypothesize that entrepreneurs differ from non-entrepreneurs in their focus of attention as entrepreneurs focus on monetary outcomes while non- entrepreneurs focus on investment risk. We further hypothesize that focus of attention drives differences in risk perception between entrepreneurs and non-entrepreneurs.

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