Articles scientifiques

The private financial gains to entrepreneurship: Is it a good use of public money to encourage individuals to become entrepreneurs?


Small Business Economics

février 2017, vol. 48, n°2, pp.323-329

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Mots clés : Entrepreneurship, Income underreporting, Public policy, Financial incentives

Recent evidence comparing earnings from entrepreneurship versus wage earning shows that, after allowing for obvious observable differences,most entrepreneurs in most developed countries earn less than similar wage-earning employees. Does this mean that the decision to become an entrepreneur should be discouraged? The answer depends in part on whether we believe that entrepreneurs report their income truthfully or not. Adjusting for what is considered to be underreporting by entrepreneurs lifts entrepreneurial earnings by between 10 and 40 %, reversing the fortunes of the entrepreneur such that they appear to be earning much more than theircounterparts in a wage-earning job. If this adjustment should prove to be appropriate, then there is no obvious reason to increase the incentive for individuals to become entrepreneurs (such as with tax breaks or direct start-up subsidies) in developed countries, and there is reason, instead, to discuss decreasing these subsidies

A theorem on aggregating classifications


Mathematical Social Sciences

janvier 2016, vol. 79, pp.6-10

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Mots clés : Aggregation of classifications, Group identification problem, Task assignment problem, Nonbinary evaluations

Suppose that a group of individuals must classify objects into three or more categories, and does so by aggregating the individual classifications. We show that if the classifications, both individual and collective, are required to put at least one object in each category, then no aggregation rule can satisfy a unanimity and an independence condition without being dictatorial. This impossibility theorem extends a result that Kasher and Rubinstein (1997) proved for two categories and complements another that Dokow and Holzman (2010) obtained for three or more categories under the condition that classifications put at most one object in each category. The paper discusses an interpretation of its result both in terms of Kasher and Rubinstein’s group identification problem and in terms of Dokow and Holzman’s task assignment problem.

Choice-based cardinal utility: a tribute to Patrick Suppes


Journal of Economic Methodology

2016, vol. 23, n°3, pp.268-288

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Mots clés : ordinal utility, cardinal utility, preference differences, representation theorems, Suppes, ordinalism, cardinalism

We reexamine some of the classic problems connected with the use of cardinal utility functions in decision theory, and discuss Patrick Suppes’ contributions to this field in light of a reinterpretation we propose for these problems. We analytically decompose the doctrine of ordinalism, which only accepts ordinal utility functions, and distinguish between several doctrines of cardinalism, depending on what components of ordinalism they specifically reject. We identify Suppes’ doctrine with the major deviation from ordinalism that conceives of utility functions as representing preference differences, while being nonetheless empirically related to choices. We highlight the originality, promises and limits of this choice-based cardinalism.

Comparing attitudes toward time and toward money in experience-based decisions


Theory and Decision

janvier 2016, vol. 80, n°1, pp.71-100

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Mots clés : Experience-based decisions, Time, Real incentives, Mixed modeling, Errors, Probability weighting

This paper reports an experimental comparison of attitudes toward time and toward money in experience-based decisions. Preferences were elicited under rank-dependent utility for prospects with two or three consequences expressed either in time or in monetary units. Probabilities were unknown but learned through sampling. More specifically, time and money were compared under two conditions. In a first experiment, both consequences and probabilities of prospects were unknown and learned through sequential sampling. In a second experiment, the possible consequences were revealed after the sampling. A real incentive system was implemented for both time and money. The heterogeneity of preferences was assessed for time and for money through individual and mixed modeling estimations. We observe that the nature of consequences (time or money) modifies probability weighting in terms of elevation and sensitivity. Subjects exhibit more optimism and less sensitivity to probability changes when deciding about time than about money. Revealing the consequences impacts the shape of the utility function and leaves probability weighting unchanged. We also observe that the real incentives have no effect except for the reduction in decision errors. This effect is stronger for money than for time

Decision biases and entrepreneurial finance


Small Business Economics

décembre 2016, vol. 47, n°4, pp.819–834

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Mots clés : Entrepreneurship, Decision biases, Cognitive biases, Entrepreneurial finance, Informal finance, Fundraising, Social ties, Venture performance

We study the effects of three cognitive biases by the entrepreneur on obtaining funding. We find planning fallacy to increase funding amounts, whereas optimism and overconfidence by the entrepreneur have no effects on funding amounts from others. Further, planning fallacy positively impacts the probability of strong-tie (inside) investments but negatively impacts the probability of weak-tie (outside) investments. Mediation analyses further show that planning fallacy positively impacts venture performance through both self and other investor funding amounts. Our findings are not consistent with the pecking order theory of informal finance and suggest positive effects of at least one cognitive bias on entrepreneurial business success through increased funding


Département Economie et Sciences de la Décision

Campus HEC Paris
1, rue de la Libération
78351 Jouy-en-Josas cedex


Tomasz Kamil MICHALSKI

Economie - Sciences de la Décision (GREGHEC)

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