Entrepreneurs Don’t Have High Risk Tolerance…

…they just have bigger egos?

Just how much appetite for risk do entrepreneurs really have? That's the question Wharton doctoral student Brian Wu began asking himself while examining their behavioral patterns. He found the general assumption to be that entrepreneurs are risk seekers — but the empirical evidence suggests that, surprisingly, they weren't. But if entrepreneurs are more cautious than everyone presumes, then what accounts for their risk-bearing behavior?

Entrepreneurs, like everybody else, hate uncontrollable risks, but on the other hand, they're overconfident in their own abilities — they think they can control their abilities in a random drawing of people. It's like the Lake Wobegon effect in assessing their position among peers. They think they're above the average.

My entrepreneurial ideals were really more work driven than anything else. I just find regular jobs so slow paced and boring. I never seemed to find fulfilling work. People say "do what you love," but what I love is to not do the same thing all the time, which rules out most jobs for me. Entrepreneurs get to wear many hats, and I like that. In terms of ability, I would say most of my skills are average, but what encourages me is the one area where I am dramatically above average (at least in my own mind) and that is figuring things out. I'm totally comfortable being in a situation that makes no sense, facing a huge learning curve, and figuring out what to do. Actually, I love those situations. It doesn't get much more fun than that.

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