Heurists and Biases with Habitual Entrepreneurs

Inhaltsangabe:Introduction: ‘When making a decision of minor importance, I have always found it advantageous to consider all the pros and cons. In vital matters, however, such as the choice of a mate or a profession, the decision should come from the unconscious, from somewhere within ourselves. In the important decisions of personal life, we should be governed, I think, by the deep inner needs of our nature.’ Sigmund Freud (1856 – 1939). Problem Statement, Research Objective and Motivation: For almost a century the dominant idea of man in economics has been the perfectly rational utility maximizer, subsumed Homo oeconomicus. In the late 1960s and 70s Amos Tversky and Daniel Kahneman conducted a serial of experiments whose results showed that individuals make judgements that systematically violate objective norms of rationality. The findings by Tversky and Kahneman confirmed, what has been theorised before by Herbert Simon (1955), that humans are boundedly or rather approximately rational. The work of these scholars has been a major impetus for the subsequent change in idea of man across various disciplines, including economics. Kahneman and Tversky (1974) identified several broad simplifying strategies, termed heuristics that have the great advantage of speed and adaptivity in decision making, though being less accurate than objective norms of rationality. Moreover, their use often results in cognitive biases, that may lead to systematic errors in judgement. Such an entry of non-rationality into human decision behavior has lead to a more realistic assessment of how decisions are actually made by individuals taking bounded rationality and uncertainty of the environment into account. The entrepreneurial field is an environment in which these factors are particularly prevalent, and individuals especially unprotected against. This may manifest in a higher susceptibility to heuristics and biases than by other subpopulations. Studies on decision making have shown that entrepreneurs often do use approximate strategies. Experimental results show both a higher susceptibility to some biases than other individuals and a lower susceptibility to other biases. These findings allow for the assumption of a situation or domain-specific susceptibility to certain biases. However, entrepreneurs are known to be a quite heterogeneous group, raising the question whether a type-specific proneness to certain heuristics and biases exists. To find out if this is the case [...]