International audienceThere is a growing body of evidence that many entrepreneurs seem to enter and persist in entrepreneurship despite earning low risk-adjusted returns. This has lead to attempts to provide explanations--using both standard economic theory and behavioral economics--for why certain individuals may be attracted to such an apparently unprofitable activity. Drawing on research in behavioral economics, in the sections that follow, we review three sets of possible interpretations for understanding the empirical facts related to the entry into, and persistence in, entrepreneurship. Differences in risk aversion provide a plausible and intuitive interpretation of entrepreneurial activity. In addition, a growing literature has begun to highlight the potential importance of overconfidence in driving entrepreneurial outcomes. Such a mechanism may appear at face value to work like a lower level of risk aversion, but there are clear conceptual differences--in particular, overconfidence likely arises from behavioral biases and misperceptions of probability distributions. Finally, nonpecuniary taste-based factors may be important in motivating both the decisions to enter into and to persist in entrepreneurship

Authority and power permeate political, social, and economic life, but empirical knowledge about the motivational origins and consequences of authority is limited. We study the motivation and incentive effects of authority experimentally in an authority-delegation game. Individuals often retain authority even when its delegation is in their material interest—suggesting that authority has nonpecuniary consequences for utility. Authority also leads to overprovision of effort by the controlling parties, while a large percentage of subordinates underprovide effort despite pecuniary incentives to the contrary. Authority thus has important motivational consequences that exacerbate the inefficiencies arising from suboptimal delegation choices. (JEL C92, D23, D82)

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. Philosophers, psychologists, and economists have long argued that certain d rights carry not only instrumental value but may also be valuable for their ow The ideas of autonomy, freedom, and liberty derive their intuitive appealpartly -from an assumed positive intrinsic value of decision rights. Providin evidence for the existence of this intrinsic value and measuring its size, how intricate. Here, we develop a method capable of achieving these goals. The dat that the large majority of our subjects intrinsically value decision rights beyond th strumental benefit. The intrinsic valuation of decision rights has potentially im consequences for corporate governance, human resource management, and o job design: it may explain why managers value power, why employees apprec with task discretion, why individuals sort into self-employment, and why the r tion of decision rights is often very difficult and cumbersome. Our method and may also prove useful in developing an empirical revealed preference foundat concepts such as "freedom of choice" and "individual autonomy."

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. Philosophers, psychologists, and economists have long argued that certain d rights carry not only instrumental value but may also be valuable for their ow The ideas of autonomy, freedom, and liberty derive their intuitive appealpartly -from an assumed positive intrinsic value of decision rights. Providin evidence for the existence of this intrinsic value and measuring its size, how intricate. Here, we develop a method capable of achieving these goals. The dat that the large majority of our subjects intrinsically value decision rights beyond th strumental benefit. The intrinsic valuation of decision rights has potentially im consequences for corporate governance, human resource management, and o job design: it may explain why managers value power, why employees apprec with task discretion, why individuals sort into self-employment, and why the r tion of decision rights is often very difficult and cumbersome. Our method and may also prove useful in developing an empirical revealed preference foundat concepts such as "freedom of choice" and "individual autonomy."

Recent field evidence suggests a positive link between overconfidence and innovative activities. In this paper we argue that the connection between overconfidence and innovation is more complex than the previous literature suggests. In particular, we show theoretically and experimentally that different forms of overconfidence may have opposing effects on innovative activity. While overoptimism is positively associated with innovation, judgmental overconfidence is negatively linked to innovation. Our results indicate that future research is well advised to take into account that the relationship between innovation and overconfidence may crucially depend on what type of overconfidence is most prevalent in a particular context.