Discussion Paper Details

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Title: Entrepreneurial Motive, Ambiguity Attitudes and Willingness to Compete

Author(s): Michelle Brock and Melanie Koch

Publication Date: September 2021

Keyword(s): ambiguity aversion, decision-making under uncertainty and entrepreneurship

Programme Area(s): Development Economics

Abstract: 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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Bibliographic Reference

Brock, M and Koch, M. 2021. 'Entrepreneurial Motive, Ambiguity Attitudes and Willingness to Compete'. London, Centre for Economic Policy Research.