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Posts Tagged ‘overconfidence bias’

I was interested to read about the overconfidence bias courtesy of Peter Klein:

Busenitz and Barney (1997) famously argued that entrepreneurs (founders) are particularly susceptible to overconfidence and representativeness biases. Compared to professional managers, entrepreneurs systematically overestimate the probability that a new venture will succeed and tend to draw unwarranted generalizations about the future from small samples.

Is this simply stating that entrepreneurs have a greater appetite for risk?  Is it explaining why they appear to have that greater appetite for risk?  More interestingly, does this say anything about whether an entrepreneur would make a poor professional manager or simply that they would be wasted in that role?

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