Abstract: The study of this paper proved that peer effects exist in entrepreneurial activities. After theoretical analysing based on the game model, it is found that individual will make the decision of starting a business due to influence of adventurous and competing spirit of surrounding entrepreneurs, or to the technology and experience gained through social learning during contacting with surrounding entrepreneurs. Both of them make entrepreneurial activities have peer effects. Further empirical study using cross-section data from the Chinese Family Panel Studies (CFPS) confirmed the above deductionshowing that:(1) the statistically remarkable peer effects in individual entrepreneurial activitiesmeans that entrepreneurial activities of neighborhood have obvious demonstration effect on individuals, which increases their expectation of participation inentrepreneurial activities. (2) applications of media transmission in information era, such as television and Internethave replacement to some extent of peer effects among physical neighbours. In the technical aspect of peer effects identification, we adopt instrumental variable method to suppress interference of correlated effects and reflection problems. The results of this paper indicate that publicities through various channels, including community interaction and various media methods, has indispensable effects in promoting public entrepreneurship,even though entrepreneurial activities are free choice behavior of individual in market participation.

Key words: peer effects, entrepreneurial activity, mass entrepreneurship