Entrepreneurs: Self-Confident Agents Busting Self-Confirming Equilibria

Michael D. Ryall

96-08-068

The purpose of this project is to develop a model to compare and contrast several competing economic views of the entrepreneur. At issue are the dimensions along which agents bearing the moniker "entrepreneur" differ from the rest of society and the results to which these differences lead. Based upon recent work in game theory, a natural definition of the entrepreneur arises: those individuals who move the rest of society away from self-confirming behaviors rooted in incorrect beliefs. We wish to explore the conditions under which such change can be effected and contrast them with traditional economic views of entrepreneurial activity. Agents in this model interact strategically while attempting to learn the true structure of their environment from observational data.