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I have also recorded the course of the discovery of the logit by former generations and some highlights of its subsequent development. This material of historical and nostalgic interest is collected in the last chapter, which readers can easily avoid. ix

This paper develops a model as a means to explain business formation and the labour demand of entrepreneurs. An individual will become an entrepreneur if the expected rewards surpass the wages of employment, and the expected rewards depend on an assessment of individual ability and on risk attitude. Actual ability determines success and hence the demand for wage labour of the firm. In equilibrium these factors govern the distribution of a given workforce over entrepreneurs and employees. The model is fitted to Dutch survey data. The empirical results confirm the importance of both risk-taking and ability for successful entrepreneurship.