On the simultaneity bias in the relationship between risk attitudes, entry into entrepreneurship and entrepreneurial survival

ABSTRACT

We consider the simultaneity bias when examining the effect of individual risk attitudes on entrepreneurship. We demonstrate that entry into self-employment is related to changes in risk attitudes. We further show that these changes are correlated with the probability to remain in entrepreneurship.

KEYWORDS:

• Risk attitudes
• entry in entrepreneurship
• entrepreneurial survival
• SOEP

JEL CLASSIFICATION:

• D03
• D81
• J23
• M13

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ risk_gen and risk_fin are measured similarly to risk_occ. For risk_lot, respondents are asked to indicate on a 6-point scale which fraction of a hypothetical lottery win they would invest in risky assets.