Entrepreneurial risk and uncertainty
Originally published: 30/04/2021 06:48
Publication number: ELQ-94310-1
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Entrepreneurial risk and uncertainty

In this video, I talk about risk and uncertainty among entrepreneurs. I focus on the decision-making process.

In this video, I talk about entrepreneurial risk and uncertainty among entrepreneurs in the decision-making process. I focus on the cognitive process of entrepreneurial decision-making process. I talk about the 'blind spots' that can arise when entrepreneurs are not focused on all the relevant facts to a business problem or a decision. I rely on the research in psychology and economics to outline how entrepreneurs make risky decisions. I outline the cognitive limitations of decision-makers and entrepreneurs by discussing rationality, bounded rationality, and irrationality. I talk about the factors that lead entrepreneurs to make riskier decisions and how these can lead to entrepreneurial failures. In particular, I talk about misperceiving important facts, over focusing on less relevant details, and being overly optimistic. I talk about how this can have an impact on decision-making. I talk about cognitive biases, such as: escalation of commitment, hindsight biases, and confirmation bias among others. I rely on my expertise in decision-making theory and outline how rationalizations play a role in how entrepreneurs can make riskier decisions. To counter these decision-making errors and cognitive biases, I provide several solutions that entrepreneurs and decision-makers can use to create awareness around the decision-making challenges that they are likely to face and how to improve their decision-making.

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