Overconfidence

New ventures are launched into difficult and dynamic environments, which can be quite risky; most new ventures fail. In the face of these odds, entrepreneurs must convince themselves and others that investing in their ventures is a good idea. Entrepreneurs should exude the confidence necessary to convince others to invest with them. They analyze the appropriate risks against potential returns before they begin the new venture. Risk and return are continually reviewed as the venture launches and begins to operate. Before launching a venture, entrepreneurs should discard ideas that do not meet appropriate risk-to-return criteria. During the operation of the new venture, they should exit when the risk-to-return criteria indicate that continuing operations will fail. However, entrepreneurs sometimes launch new ventures or continue to operate ...