Discussion paper

DP16559 Entrepreneurial Motive, Ambiguity Attitudes and Willingness to Compete

Different entrepreneurial motivations can lead to different business outcomes. The origins of these difference in outcomes are not well understood so far. In this study, we use a lab-in-the-field experiment to analyze how two distinct types of entrepreneurs handle the uncertainty of competition. Our subject pool includes people with real entrepreneurial experience, who either started a business out of necessity or who took an optional business opportunity. We test a treatment that boosts feelings of competence and whether ambiguity aversion or a-insensitivity moderate the treatment effect on willingness to compete. Our results indicate that necessity entrepreneurs are more likely to adjust their decision-making following the treatment. A-insensitivity, as opposed to ambiguity aversion, plays an important role in differentiating their responses from that of opportunity entrepreneurs.

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Citation

Brock, J and M Koch (eds) (2021), “DP16559 Entrepreneurial Motive, Ambiguity Attitudes and Willingness to Compete”, CEPR Press Discussion Paper No. 16559. https://new.cepr.org/publications/dp16559