ural and Political Observations Made upon the Bills of Mortality (1662) stands as the first great example of modern statistical data analysis, Bernstein also spends some time telling us about the genesis of Lloyd’s of London, the famous insurance firm. This weaving of topics that are standard in the history of probability and statistics with many that are not is one of the strengths and attractions of the book. Another is the obvious zest with which Bernstein describes the many intriguing people and tantalizing mysteries so peculiar to the mathematics of chance.

Against the Gods: The Remarkable Story of Risk

Publisher Summary This chapter discusses the psychology of risk: what risk is (if it is anything at all), how people think about it, what they feel about it, and what they do about it. The chapter describes the way psychologists think about risk: how they study it, what tasks they use, what factors they vary, and what models they build (or borrow) to describe risk-taking behavior. Technically, the word risk refers to situations in which a decision is made whose consequences depend on the outcomes of future events having known probabilities. Psychological studies of risky choice (it is the term used conventionally to refer to all but the most extreme instances of ignorance or ambiguity) fall into two groups. At one extreme are the studies run by mathematically inclined experimental psychologists in which subjects make decisions about gambles described in terms of amounts and probabilities. At the other extreme are studies run by personality psychologists, who are mostly interested in individual differences in risk taking. A theory of risky choice is presented in the chapter that attempts to meld the strengths of both approaches. Empirically and methodologically it is tied to the experimental approach to risky choice. But theoretically it is more strongly tied to motivational approaches.

[Advances in Experimental Social Psychology] Advances in Experimental Social Psychology Volume 20 Volume 20 || Between Hope and Fear: The Psychology of Risk

We survey the theory and evidence of behavioral corporate finance, which generally takes one of two approaches The market timing and catering approach views managerial financing and investment decisions as rational managerial responses to securities mispricing The managerial biases approach studies the direct effects of managersâ€™ biases and nonstandard preferences on their decisions We review relevant psychology, economic theory and predictions, empirical challenges, empirical evidence, new directions such as behavioral signaling, and open questions

Behavioral Corporate Finance: An Updated Survey

This paper discusses the effect of psychological traits on success. We empirically explore the effect of entrepreneurs’ psychological biases on their venture success. Using a sample of Tunisian entrepreneurs and the cognitive mapping technique, our results indicate that psychology does affect business venture success. Especially, the entrepreneurial overconfidence and optimism biases can largely affect the new venture success. However, other variables, such as capital and social networks, also have strong effects on new venture success in this country. We control for gender differences and their effects on our empirical findings. For this purpose, we divide our full sample to constitute two sub-samples using the entrepreneur’s gender. We find that the behavioral factors, especially overconfidence, optimism and hope, have a great impact on new venture launched by female entrepreneurs compared to male entrepreneurs. In fact, the success of new venture launched by male entrepreneurs is less affected by behavioral factors and only the overconfidence bias can have an influence and their new venture success remains dependent to their age, experience and education.

Does entrepreneurs’ psychology affect their business venture success? Empirical findings from North Africa

Abstract This paper assesses the ways in which the characteristics of entrepreneurs from transition economies, and the extent to which they participate in making business decisions, affect their propensity to make rational/risky decisions in a work environment. A multicontextual analysis of entrepreneurial decision-making is provided, facilitating a better understanding and the further advancement of entrepreneurship in the transition countries of Montenegro and Serbia. Logistic regression and a Structural Equation Model (SEM) were used to assess data collected from a stratified random sample of 260 entrepreneurs. The results reveal that the demographic characteristics of entrepreneurs have a significant impact on their propensity to make rational/risky decisions. Elderly entrepreneurs with more years of service are more prone to make rational decisions in comparison to younger entrepreneurs, who lack business experience and thus rely on intuition, leading to risky decision-making. Additionally, the results show that the more involved entrepreneurs are in the decision-making process, the more risky decisions will be made; while more employee inclusion leads to business decisions based on rational thinking. The results also reveal that entrepreneurs in transition economies have formed attitudes towards the nature of entrepreneurial activity. Finally, these results reveal that entrepreneurs who consider levels of economic development, national culture, and intuition to be important when making business decisions are more prone to implement risky decisions. Considering the obtained results, this paper provides guidelines for the future research of this issue in transition countries and other developing economies. 

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Entrepreneurial decision-making perspectives in transition economies – tendencies towards risky/rational decision-making

The aim of this paper is to present a comprehensive literature review around the transition from rational to behavioral entrepreneurship theory, and its implications. In fact, it discusses in some depth the origin and the behavioral aspects of this new theory. It presents also a review of the most documented biases and their effect on entrepreneurial decisions. At the end of this paper, we propose some future directions of research around this new behavioral theory.

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Elhem Ben Fatma

Papers

Behavioral Entrepreneurship Theory: A Survey and Future Directions