Risk and Uncertainty

  • Sharon GiffordEmail author
Part of the International Handbook Series on Entrepreneurship book series (IHSE, volume 5)


Imagine that you have a brilliant idea for a new business. In fact, your experience and expertise lead you to believe that this is a sure-fire winner. You approach the bank with your idea and they only laugh. You also discover that venture capitalists require a very high interest rate (or equity stake) in order to fund your venture. What’s going on here? One explanation is that, because you are an entrepreneur, you are more willing than investors to undertake risk, that is, you are less risk averse. This is a long-standing argument in the literature on what makes an entrepreneur (Brockhaus 1980). An alternative explanation is that entrepreneurs seeking funding think they are selling US treasury bills while investors think they are being offered pre-Castro government bonds.


Human Capital Risk Aversion Venture Capitalist Entrepreneurial Activity Moral Hazard 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Department of Finance and EconomicsRutgers UniversityNewarkUSA

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