Economists have found that entrepreneurs are likely to have subjective beliefs about the probability of entrepreneurial success that are higher than the actual objective probabilities. These beliefs are most closely related to which of the following behavior concepts?
A)People are overconfident.
B)People give too much weight to a small number of vivid observations.
C)People are reluctant to change their minds.
D)People are inconsistent over time.

Question

​Economists have found that entrepreneurs are likely to have subjective beliefs about the probability of entrepreneurial success that are higher than the actual objective probabilities. These beliefs are most closely related to which of the following behavior concepts?
A)​People are overconfident.
B)​People give too much weight to a small number of vivid observations.
C)​People are reluctant to change their minds.
D)​People are inconsistent over time.

Quizplus · Accepted Answer

Entrepreneurs' subjective beliefs about the probability of success being higher than the objective probabilities is an example of overconfidence bias. Overconfidence bias occurs when individuals overestimate their abilities or the likelihood of positive outcomes. Therefore, the entrepreneurs' subjective beliefs are most closely related to the behavior concept that people are overconfident.

​Economists Have Found That Entrepreneurs Are Likely to Have Subjective

Economists Have Found That Entrepreneurs Are Likely to Have Subjective