Entrepreneurship Under Risk and Uncertainty: A Review of the Experimental Evidence

Abstract

A considerable amount of research has been devoted in an effort to identify the behavioural traits that distinguish entrepreneurs from other people. A strand of the literature investigates the attitudes that entrepreneurs exhibit towards uncertainty, either objective (risk) or subjective (ambiguity). Indeed, the standard theory predicts that people, who are involved in entrepreneurial activities, tend to have distinct risk and ambiguity attitudes compared to those who engage in salary-paid employment. Nevertheless, the empirical evidence on this topic, based on field data, is mixed. Recently, methods from the experimental economics literature have been employed in order to shred light to this issue. This chapter provides an extensive review of the literature that experimentally studies the correlation between uncertainty attitudes and entrepreneurial decision making. The chapter concludes with a discussion of potential paths for further research.