This paper considers the persistence of earnings differentials between wage earners and the self-employed through modeling overconfidence. The model examines challenges of limited information and its impact in the decision-making process. Using a Bayesian setting and concentrating specifically on the entrepreneur’s entry decision, the model shows how limited information can lead to substantial overestimation of potential profits and other outcomes even if the decision-maker has unbiased prior beliefs. The driving force behind the conclusion is the assumption that decision-makers, such as entrepreneurs, are not aware that available information is limited. For entrepreneurship, the resulting bias leads to overconfidence, excessive entry and the persistence of lower returns to entrepreneurship when compared to returns in the wage sector. This situation may arise wherever attrition is present, from military to business schools to medicine. Going the extra mile to gather and incorporate all relevant information into decision-making pays off in better quality decisions.

中文翻译：

---

生存、流失和有偏见的决策

本文通过对过度自信的建模来考虑工资收入者和个体经营者之间持续存在的收入差异。该模型研究了有限信息的挑战及其在决策过程中的影响。该模型使用贝叶斯设置并特别关注企业家的进入决策，显示了即使决策者具有公正的先验信念，有限的信息也会导致对潜在利润和其他结果的严重高估。结论背后的驱动力是假设决策者，如企业家，不知道可用信息是有限的。对于创业而言，与工资部门的回报相比，由此产生的偏见会导致过度自信、过度进入以及创业回报持续较低。这种情况可能发生在任何存在减员的地方，从军队到商学院，再到医学。加倍努力收集所有相关信息并将其整合到决策中会带来更优质的决策。