Small Business Overconfidence

The August Journal of Economic Psychology says that across 18 countries "subjective, and often biased, perceptions have a crucial impact on new business creation." For example, the strongest predictor of who starts a new business is "whether the person believes herself to have the sufficient skills, knowledge and ability to start a business."  But for those who do start a business, the higher such confidence, the lower their "approximate survival chances." Furthermore, "some countries exhibit relatively high rates of start-up activity because their inhabitants are more (over)confident than in other countries."

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