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| Author: | Atolia, M. Prasad, K. |
| Title: | Relative wealth concerns and entrepreneurship |
| Journal: | Economica
2011 : APR, VOL. 78:310 p. 294-316 |
| Index terms: | models occupational choice entrepreneurship risk behaviour behavioural science risk aversion uncertainty |
| Language: | eng |
| Abstract: | This research paper proposes a model of occupational choice and entrepreneurship in the presence of relative wealth concerns. A concern for relative standing arises even though individuals care only about consumption of standard commodities. It is assumed that entrepreneurial returns are not diversifiable, which results in less entrepreneurship than would be the case with complete markets. Relative wealth concerns are shown to lead to an increase in entrepreneurship and risk-taking, mitigating this difficulty substantially. When the profile of the economy is changed to include more risk-averse people, it is found that there is a greater increase in entrepreneurship. The effects of uncertainty about economic policies such as market-based reforms on entrepreneurship are explored. |
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