Abstract (EN)

In this paper, I investigate the interplay between entrepreneurial biases such as optimism/overconfidence and the stigmatization of failure. I first establish the optimality of debt contracts even with biased entrepreneurs and then show that when contracting with overconfident entrepreneurs, investors provide them more funds compared to rational entrepreneurs. Indeed, when entrepreneurs are overconfident, agency rents are reduced, and they suffer less from credit rationing. Even after a failure, entrepreneurs who remain overconfident benefit from an easier access to financing. However, this should not be confounded with the stigmatization of failure which exists regardless of the level of confidence, as long as investors are pessimistic. “Success is not final, failure is not fatal: it is the courage to continue that counts.” W. Churchill