Intuitive optimizing: experimental findings on time allocation decisions with newly formed ventures

This paper offers a theoretical and an experimental analysis of decision making in an entrepreneurial context. We investigate how individuals distribute their time between leisure and working activities, and how they divide their working time between their newly formed venture and a wage job. Two questionnaire experiments with business and economics students are utilized to test benchmark predictions from an economic model, which we complement with predictions based on behavioral decision theory. Differences between economic predictions and behaviors are found to be dependent on whether the venture dominates the wage job, the wage job dominates the venture, or none dominates the other. Implications for entrepreneurial behavior are derived for these three scenarios.