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Theory predicts that entrepreneurs have distinct attitudes toward risk and uncertainty, but empirical evidence is mixed. To better understand the unique behavioral characteristics of entrepreneurs and the causes of these mixed results, we perform a large “lab-in-the-field” experiment comparing entrepreneurs to managers (a suitable comparison group) and employees (n = 2,288). The results indicate that entrepreneurs perceive themselves as less risk averse than managers and employees, in line with common wisdom. However, when using experimental incentivized measures, the differences are subtler. Entrepreneurs are only found to be unique in their lower degree of loss aversion, and not in their risk or ambiguity aversion. This combination of results might be explained by our finding that perceived risk attitude is not only correlated to risk aversion but also to loss aversion. Overall, we therefore suggest using a broader definition of risk that captures this unique feature of entrepreneurs: their willingness to risk losses. This paper was accepted by Uri Gneezy, behavioral economics.

Substantial political power is often attributed to interest groups. The origin of this power is not quite clear, though, and the mechanisms by which influence is effectuated are not yet fully understood. The last two decades have yielded a vast number of studies which use empirical models to assess the importance of interest groups for the formation of public policy. Each of these studies yields insights on particular, confined aspects of interest group politics. To get a more complete picture of the results, however, a broad survey of the literature seems useful. It is the purpose of this paper to provide such a survey.JEL classification: D72; D78

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Standard economic theory predicts that firms will not invest in general training and will underinvest in specific training. Empirical evidence, however, indicates that firms do invest in general training of their workers. Evidence from laboratory experiments points to less underinvestment in specific training than theory predicts. We propose a simple model in which a firm invests the socially optimal amounts in general and specific training if the worker is sufficiently motivated by reciprocity. A reciprocal worker may be willing to give the firm a full return on its investment. We present empirical evidence that supports the proposed mechanism. Workers with a high sensitivity to reciprocity have 15% higher training rates than workers with a low sensitivity to reciprocity.

Theoretical analyses of (optimal) performance measures are typically performed within the realm of the linear agency model. An important implication of this model is that, for a given compensation scheme, the agent's optimal e¤ort choice is unrelated to the amount of noise in the performance measure. In contrast, expectancy theory as developed by psychologists predicts that e¤ort levels are increasing in the signal-to-noise ratio. We conduct a real e¤ort laboratory experiment to assess the relevance of this prediction in a setting where all key assumptions of the linear agency model are met. Moreover, our experimental design allows us to control expectancy exactly as in Vroom's (1964) original expectancy model. In this setting, we …nd that e¤ort levels are invariant to changes in the distribution of the noise term, i.e. to expectancy. Our results thus con…rm standard agency theory and reject this particular aspect of expectancy theory.