How endogenous risk preferences and sample selection affect analysis of firm survival

dc.contributor.author Cho, Insoo
dc.contributor.author Orazem, Peter
dc.contributor.author Orazem, Peter
dc.contributor.department Economics
dc.date 2021-01-20T19:18:57.000
dc.date.accessioned 2021-02-25T18:23:19Z
dc.date.available 2021-02-25T18:23:19Z
dc.date.copyright Wed Jan 01 00:00:00 UTC 2020
dc.date.issued 2020-01-04
dc.description.abstract <p>The roles of selection and endogeneity in measured risk preferences are illustrated using the correlation between risk attitudes and firm survival. Selection bias occurs when risk attitudes are elicited only from current entrepreneurs so that the risk attitudes of unsuccessful entrepreneurs are excluded from the analysis. Risk attitudes measured after agents enter entrepreneurship will endogenously reflect business success. Data on entrepreneurs from the National Longitudinal Survey of Youth 1979 and the Panel Study of Income Dynamics shows that when risk attitudes are measured subject to selection and endogeneity, mixed or even positive correlations between risk acceptance and the probability of firm exit occur. However, firm exits fall monotonically with willingness to accept risk when risk preference measures are not subject to selection or endogeneity related to business success.</p>
dc.description.comments <p>This is a manuscript of an article published as Cho, I., Orazem, P.F. How endogenous risk preferences and sample selection affect analysis of firm survival. <em>Small Bus Econ</em> (2020). doi: <a href="https://doi.org/10.1007/s11187-019-00288-w">10.1007/s11187-019-00288-w</a>. Posted with permission.</p>
dc.format.mimetype application/pdf
dc.identifier archive/lib.dr.iastate.edu/econ_las_pubs/780/
dc.identifier.articleid 1791
dc.identifier.contextkey 21186260
dc.identifier.s3bucket isulib-bepress-aws-west
dc.identifier.submissionpath econ_las_pubs/780
dc.identifier.uri https://dr.lib.iastate.edu/handle/20.500.12876/94111
dc.language.iso en
dc.source.bitstream archive/lib.dr.iastate.edu/econ_las_pubs/780/2020_Orazem_HowEndogenousManuscript.pdf|||Sat Jan 15 01:54:30 UTC 2022
dc.source.uri 10.1007/s11187-019-00288-w
dc.subject.disciplines Behavioral Economics
dc.subject.disciplines Econometrics
dc.subject.disciplines Entrepreneurial and Small Business Operations
dc.subject.disciplines Longitudinal Data Analysis and Time Series
dc.subject.keywords Endogenous risk attitudes
dc.subject.keywords sample selection
dc.subject.keywords firm survival
dc.subject.keywords hazard rate
dc.subject.keywords risk acceptance
dc.title How endogenous risk preferences and sample selection affect analysis of firm survival
dc.type article
dc.type.genre article
dspace.entity.type Publication
relation.isAuthorOfPublication c9a0d8cb-216b-42cb-a055-23a56438e364
relation.isOrgUnitOfPublication 4c5aa914-a84a-4951-ab5f-3f60f4b65b3d
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