Entrepreneurial Exit in Real and Imagined Markets
Economic progress hinges on the essential mechanisms of the creation of variation and the operation of selection. Creation of variation is often analyzed investigating the entry of new firms, whereas selection is analyzed investigating the exit of incumbent firms (ex-post selection). Entrepreneurs exit their business due to selection pressures experienced in the market place, i.e. business failure. Next to this well known ex-post decision to exit, entrepreneurs select ex-ante whether they are willing to pursue an entrepreneurial career at all, or to give up these entrepreneurial intentions. Hardly anything is known about the latter selection process in imagined markets that precedes the variety creation and selection process in real markets.