Intuitive Optimizing : Experimental Findings on Time Allocation Decisions with Newly Formed Ventures

Decision making in an entrepreneurial context is explored using theoretical and experimental analysis. How individuals use their leisure and work time and how they distribute their work time between their regular wage job and a new venture is also investigated. Data were acquired from two questionnaires given to 112 German business and economics students to test behavioral decision theory. This methodology was used because of the likelihood of difficulty to control in a field study for the broad selection of factors believed to influence risky new venture decisions in natural settings. Findings indicate that economic predictions and behaviors are dependent on whether the venture dominates the wage job, the wage job dominates the venture, or neither one dominates the other. Conclusions show that, under experimental conditions where expected utility was maximized from allocating all working time to the venture, risk aversion moved downward with the number of hours allocated to the venture. When intermediate time allotments to the venture were optimal, risk aversion did not affect the number of hours allocated to wage jobs and the total number of working hours. (JSD)