Entrepreneurial Decision-Making For The International Encyclopedia of Business Management

Entrepreneurial decision-making involves selecting a course of entrepreneurial action. From a cognitive perspective, this chapter outlines how entrepreneurs navigate uncertainty, ambiguity, and emotional stress in their decision-making, which is important to understand due to its economic consequences. Entrepreneurial decision-making is vulnerable to heuristic shortcuts and their biases. Yet, some heuristic shortcuts can yield good enough decisions under uncertainty as they can exploit the most relevant cues and minimize noise. Similarly, when predicting future outcomes is difficult, entrepreneurs can use effectuation as a heuristic strategy for controlling possible losses. When uncertainty is very high, entrepreneurs might even resort to eristic shortcuts based on their hedonic urges, leading to impulsive decisions.