ABSTRACTOverplacement, a form of overconfidence characterized by the distorted belief that one is better than others, is considered a key driver of nascent entrepreneurship. The entrepreneurship literature typically associates entrepreneurial overplacement with negative outcomes and attributes it to erroneous information processing. The potential role of motivated reasoning and beliefs in nascent venturing has therefore been overlooked. We argue that, since radical uncertainty is a fundamental characteristic of market entry decisions and entrepreneurs require psychological capital to navigate adversities during the early stages of entrepreneurship, overplacement at market entry is likely linked to goal‐motivated beliefs. In a modified market entry experiment, we found that miscalculation‐driven overoptimism about the intensity of competition and goal‐motivated beliefs contribute to entrepreneurial overplacement. Thus, this study offers new insights into the sources of entrepreneurial overplacement and provides potential explanations for the ambiguous results of studies examining the effects of entrepreneurial overconfidence on venture performance. It also highlights the importance of motivated reasoning in nascent venturing activities under radical uncertainty.