Theresa Treffers

Self-employed but looking : a labour market experiment

We examine whether having previously been self-employed is a negative signal on the job market. In a UK field experiment where two applications of otherwise equally qualified individuals were sent out in response to the same vacancies in human resource management, we find that entrepreneurs systematically receive fewer responses than non-entrepreneurs. Empirical studies that treat market wages as the opportunity cost of remaining self-employed are therefore likely to overestimate alternative earnings to entrepreneurship.

Joy Leads to Overconfidence, and a Simple Countermeasure

Overconfidence has been identified as a source of suboptimal decision making in many real-life domains, with often far-reaching consequences. This study identifies a mechanism that can cause overconfidence and demonstrates a simple, effective countermeasure in an incentive-compatible experimental study. We observed that joy induced overconfidence if the reason for joy (an unexpected gift) was unrelated to the judgment task and if participants were not made specifically aware of this mood manipulation. In contrast, we observed well-calibrated judgments among participants in a control group who were in their resting mood. Furthermore, we found well-calibrated judgments among participants who received the joyful mood induction together with questions that forced them to reflect on their current mood and the (ir)relevance of its cause to our judgment tasks. Our findings suggest that being aware of one’s positive mood and the reason for that mood may effectively reduce overconfidence for a short period.

Emotional paths leading to opportunity desirability and feasibility beliefs through controllability

Extant studies promote opportunity belief as an antecedent of entrepreneurial action. However, we do not sufficiently understand how beliefs about the desirability and feasibility of an entrepreneurial opportunity are formed. We argue that desirability and feasibility are related but distinct micro-foundations of entrepreneurial action formed through different cognitive-emotional mechanisms. Drawing on the appraisal tendency framework, we investigate the indirect effects of three basic emotions (anger, fear and happiness) on desirability and feasibility through the appraisal tendency of controllability. In an experimental study (N = 191), we find evidence for the distinctiveness and interconnectedness of desirability and feasibility beliefs. In addition, our findings show that desirability can be predicted by emotions through controllability, but we cannot predict feasibility through the same appraisal process. Our study seeks insights concerning how desirability and feasibility beliefs regarding an entrepreneurial opportunity are distinctively formed based on the inner cognitive and emotional processes of individuals.

Sadder But Wiser: The Effects of Affective States and Weather on Ambiguity Attitudes

Many important decisions are made without precise information about the probabilities of the outcomes. In such situations, individual ambiguity attitudes influence decision making. The present study identifies affective states as a transient cause of ambiguity attitudes. We conducted two random-assignment, incentive-compatible laboratory experiments, varying subjects’ affective states. We find that sadness induces choices that are closer to ambiguity-neutral attitudes compared with the joy, fear, and control groups, where decision makers deviate more from payoff-maximizing behaviors and are more susceptible to likelihood insensitivity. We also find a similar pattern in a representative population sample where cloudy weather conditions on the day of the survey - a proxy for sad affect - correlate with more ambiguity-neutral attitudes. Our results may help explain re al-world phenomena such as financial markets that react to regular fluctuations in weather conditions.

The Role of Emotions and Cognitions in the Pre-entrepreneurial Process: What’s New?

Emotions have long been neglected in entrepreneurship research and scholars mostly focused on cognitive models and on external influences. With the argument that emotions and cognitions are inseparably intertwined came the insight that emotions and cognitions have to be studied together to gain an understanding of why some individuals become entrepreneurs while others do not. Over the past decade or so, emotion research has found its way into entrepreneurship research, and the empirical results surrounding this research look very promising in advancing the field of entrepreneurship.

A few words about neuroexperimental designs for the study of emotions and cognitions in entrepreneurship

The study of emotions and cognitions during the entrepreneurial process is a rising and promising research stream. Because these psychological constructs are particularly difficult to grasp with conventional behavioral study methods, this chapter attempts to stimulate complementary neuroscientific research in the field of neuroentrepreneurship. For this purpose, this chapter first reviews selective studies from the field of affective and cognitive neuroscience. After that, I describe some important design issues to consider before starting to conduct a neuroentrepreneurial study. Eventually, I present five neuroentrepreneurial study designs that entail the study of emotions and cognitions in entrepreneurs and can potentially give new insights into existing behavioral evidence. With this chapter, I hope to stimulate thought and action for an increase in rigorous and relevant neuroentrepreneurial studies.

Be Happy, but Always Remember: The Neural Correlates of Affect and Overconfidence

Overconfidence is one of the most prevalent cognitive biases that can impair people’s judgment and decision quality. Recent behavioral evidence indicates that affective states can be a transient ca...

Entrepreneurial exit intentions and recruitment barriers

Current studies indicate that self-employment may be a negative signal to potential employers, but the reasons have not been identified. We investigate job candidates’ human capital and environmental characteristics based on 135,000 observations of job candidates and recruiters from an online job market portal. Our results demonstrate that job candidates who are entrepreneurial are significantly less interesting to recruiters for wage employment than employed job candidates. Recruiter interest in entrepreneurial job candidates depends on entrepreneurial job candidate’s education, job tenure, current salary, prior industry experience, and level of entrepreneurial activity in their country of origin.

Self-Employed but Looking: A Labor Market Experiment

Empirical studies have shown that entrepreneurs earn, on average, less than the market wage for employees with otherwise similar characteristics. We examine whether having previously been self- emp...

I think It’s Good, but I’m Also Afraid: The Interplay of Opportunity Evaluation and Emotions as Antecedent of Entrepreneurial Exploitation

This research examines the interplay of opportunity evaluation and emotions as determinants of entrepreneurial exploitation, using affect-as-information theory and the affective processing principle as conceptual bases. Three central assumptions are confirmed across two studies. The first is that the effects of opportunity characteristics on exploitation are mediated by evaluation. The second is that emotions influence exploitation decisions in addition to evaluation. Fear reduces exploitation whereas joy and anger increase it. The third is that fear, joy, and anger influence evaluation’s effect on exploitation with higher levels of fear reducing and higher levels of joy and anger increasing the positive impact of evaluation on exploitation.