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December 2023 (published: 07.12.2023)
Number 4(55)
Home > Issue > The influence of uncertainty and risk on the behavior of entrepreneurs, their number
and choice of field of activity
Poltoratskaiy Т.B., Shapiro N.A.
The paper examines the impact of uncertainty and risk on entrepreneurs by analogy with the ideas of M. Friedman and L. J. Savage, who divided the economically active population into groups based on psychological perception of risk. This division allows, based on a probabilistic approach, to quantify the relative size of groups of entrepreneurs prone to different types and areas of entrepreneurial activity. The validity of the presented classification and subsequent logical conclusions is tested by two methods. The theory of probability and the resulting mathematical theory of entropy by K. Shannon, as well as game-theoretic analysis of the probability matrix for generating income under different states of uncertainty, were used. At the same time, the level of uncertainty in the economic environment is considered as the state of nature of the class of games with nature. A game matrix was constructed and various outcomes of the game were considered when an individual used one or another criterion. The results confirm the hypothesis about the legitimacy of using the approach of M. Friedman and L. J. Savage to classify entrepreneurs. Taking into account the qualitative heterogeneity of entrepreneurs in relation to risk and uncertainty allows us to draw conclusions about the measures and nature of the impact of economic policy on the development of entrepreneurship and adjust the expected results. An element of novelty can be considered the clarification of ideas about the intentions of an economic entity or the choice of strategy by an individual for engaging in entrepreneurship. It is shown that entrepreneurship becomes widespread at a low level of uncertainty, which corresponds to a guaranteed small but stable income. In an economy with a low level of uncertainty, in addition to risky individuals, the ranks of entrepreneurs are replenished with risk-averse subjects who count on moderate incomes. It is concluded that the level of development of entrepreneurship, especially in the field of small and medium-sized businesses, has a close connection with the individual’s psychological attitude towards risk. It is recommended to take this factor into account when developing and implementing programs to support and develop entrepreneurship.
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Keywords: economically active population, classification of entrepreneurial behavior, risk, uncertainty, entropy theory, game-theoretic approach
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
UDC 338.242.2
The influence of uncertainty and risk on the behavior of entrepreneurs, their number
and choice of field of activity
The paper examines the impact of uncertainty and risk on entrepreneurs by analogy with the ideas of M. Friedman and L. J. Savage, who divided the economically active population into groups based on psychological perception of risk. This division allows, based on a probabilistic approach, to quantify the relative size of groups of entrepreneurs prone to different types and areas of entrepreneurial activity. The validity of the presented classification and subsequent logical conclusions is tested by two methods. The theory of probability and the resulting mathematical theory of entropy by K. Shannon, as well as game-theoretic analysis of the probability matrix for generating income under different states of uncertainty, were used. At the same time, the level of uncertainty in the economic environment is considered as the state of nature of the class of games with nature. A game matrix was constructed and various outcomes of the game were considered when an individual used one or another criterion. The results confirm the hypothesis about the legitimacy of using the approach of M. Friedman and L. J. Savage to classify entrepreneurs. Taking into account the qualitative heterogeneity of entrepreneurs in relation to risk and uncertainty allows us to draw conclusions about the measures and nature of the impact of economic policy on the development of entrepreneurship and adjust the expected results. An element of novelty can be considered the clarification of ideas about the intentions of an economic entity or the choice of strategy by an individual for engaging in entrepreneurship. It is shown that entrepreneurship becomes widespread at a low level of uncertainty, which corresponds to a guaranteed small but stable income. In an economy with a low level of uncertainty, in addition to risky individuals, the ranks of entrepreneurs are replenished with risk-averse subjects who count on moderate incomes. It is concluded that the level of development of entrepreneurship, especially in the field of small and medium-sized businesses, has a close connection with the individual’s psychological attitude towards risk. It is recommended to take this factor into account when developing and implementing programs to support and develop entrepreneurship.
Read the full article
Keywords: economically active population, classification of entrepreneurial behavior, risk, uncertainty, entropy theory, game-theoretic approach
DOI 10.17586/2310-1172-2023-16-4-90-99