Abstract

The common ground of behavioral economics and entrepreneurship research lies in answering two related questions: What drives economic behavior? And what makes entrepreneurial behavior different from other people’s behavior? Although both behavioral economics and entrepreneurship research start out with different foci, they encounter the same challenges. Both put the homo oeconomicus as an optimizing representative agent into perspective. Whereas the homo oeconomicus manages to maximize subjective utility, human mankind evidently has a hard time in doing so. In general, a lack of information, uncertainty, and bounded capabilities thwart such kinds of behavior. In this chapter we will lay out the behavioral and psychological foundations of entrepreneurship theory, and refer to a selection of behavioral approaches in the entrepreneurship literature.