The Effect of Time Horizon on Entrepreneurial Risk Taking Behavior
Type of Research
Faculty Research Seminars
2014, After July
Discipline-based scholarship (basic research)
SDSU Psychology Department
Does time horizon affect how entrepreneurs and managers make risky decisions? Time horizon, the span of time in which decision makers view and evaluate decisions, will likely affect how decision makers frame decisions. Utilizing an established experimental design adopted from Gneezy & Potters (1997), we find that entrepreneurs take significantly higher risks than managers when facing a short-term time horizon. Importantly, the differences in risk taking behavior between the two groups are the largest when they face a short-term time horizon and do not receive any relevant feedback.