Risk Taking by Entrepreneurs

Hugo Hopenhayn and Galina Vereshchagina

No 500, RCER Working Papers from University of Rochester - Center for Economic Research (RCER)

Abstract: Entrepreneurs bear substantial risk, but empirical evidence shows no sign of a positive premium. This paper develops a theory of endogenous entrepreneurial risk taking that explains why self-financed entrepreneurs may find it optimal to invest into risky projects offering no risk premium. The model has also a number of implications for firm dynamics supported by empirical evidence, such as a positive correlation between survival, size, and firm age.

Keywords: occupational choice; risk taking; firm dynamics; borrowing constraints. (search for similar items in EconPapers)
JEL-codes: D92 E21 L25 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2003-04
New Economics Papers: this item is included in nep-ent, nep-mic and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Downloads: (external link)
http://rcer.econ.rochester.edu/RCERPAPERS/rcer_500.pdf full text (application/pdf)
None

Related works:
Journal Article: Risk Taking by Entrepreneurs (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:roc:rocher:500

Access Statistics for this paper

More papers in RCER Working Papers from University of Rochester - Center for Economic Research (RCER) University of Rochester, Center for Economic Research, Department of Economics, Harkness 231 Rochester, New York 14627 U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by Richard DiSalvo ( this e-mail address is bad, please contact ).