Exploring decision-making biases among Iranian entrepreneurs: some novel insights

Purpose Decision-making biases play decisive roles not only in entrepreneurs’ decisions but also in the fate of entrepreneurial businesses. While the extant literature in this regard is relatively rich, it has predominantly focused on certain biases like overconfidence and overoptimism at the expense of other possibly influential biases, which could influence entrepreneurial decisions. Thus, to address this serious research gap, this paper aims to explore four of the less-researched biases of escalation of commitment, the illusion of control, confirmation and the belief in the law of small numbers in entrepreneurial decisions. Design/methodology/approach By taking a qualitative approach, the data for this study were collected through face-to-face interviews with 19 Iranian habitual (experienced) entrepreneurs running small businesses and analyzed by a qualitative thematic analysis. Findings According to the results, the environmental uncertainty, the reluctance to lose face and the experiences of previous failures contributed to the escalation of commitment, while disregard for external factors beyond one’s control caused the illusion of control, factors like prior successful businesses in the same sector, looking for resorts to manage uncertainty, along with the decision to exploit opportunities resulted in the confirmation bias, while the expenses of conducting sweeping pilot tests in the market and the reluctance to reveal a business secret to the competitors were the main contributors of the belief in the law of small numbers. Originality/value This study is a pioneer in scrutinizing four less-researched but important biases in entrepreneurs and, thus extending the line of research in this regard.

Personal Values & Decision-Making Biases

Decision-making is understood to be influenced by genetic and environmental factors related to need, as are personal values. Personal values are a component of personality known to influence decision-making in agreement with the circular structure of the Schwartz (1992) system. We set out to explore whether personal values also exert complementary linear patterns of influence on heuristics and performance in fluid intelligence and creativity tests. Such patterns are predicted by an evolutionary theory that proposes the influence of values described by Schwartz (1992) evolve sequentially and incrementally in living systems, internalising the schema of a pre-existing system of universal equivalents. Testing N=1317 individuals with challenges derived from Kahneman and Tversky and others, we found values exerted both circular and linear influences on intuitive and rational decision-making. These were apparent in overall value/response correlation patterns, and in the performance of individuals allocated to linear, values-based, quasi-Maslowian (1943) motivational types. Performance in fluid intelligence and creativity tests most strongly betrayed linear, developmental patterns of influence. In relation to a Bayesian inference challenge, tentative support was also forthcoming for the hypothesis that those most likely to be subject to values-related conflicts would be most likely to avoid giving erroneous intuitive responses by engaging rational system 2 thinking (Stanovich & West, 2000). This suggests values may also play a role in mediating between rational and irrational systems of thinking. These findings extend our understanding of the role values play in individual decision-making, and by extension, their importance in organizational and societal decision-making.

Extending the Theory of Planned Behaviour Using Behavioural Economics to Reduce and Access Small WEEE Anthropogenic Stocks

From an urban mining perspective stockpiles of Waste of Electronic and Electrical Equipment (WEEE) by individuals represent anthropogenic stocks that could be exploited for precious and critical resources. The current challenge resides in minimising these stocks generation, as well as accessing the resources they represent. Behavioural models such as the Theory of Planned Behaviour (TPB) have been used in waste and resources management studies to understand WEEE end-of-use intentions and behaviours. But the results have been uneven and the very presence of these anthropogenic stocks is the acknowledgement that these models need to be adapted. Based on a review from the waste and resources management literature we found that TPB models incorporating emotions tended to have higher variance explained for intention, but the intention-behaviour gap remained strong. To explain this gap for small WEEE we propose using variables associating emotions with decision-making biases and tendencies that affect individual behaviours. This study is a theoretical elaboration supporting future empirical testing. A TPB extended with behavioural economics could better model small WEEE end-of-use decisions. Improved understanding of small WEEE urban mines generation could, in turn, inform policy and incentives design to transform these anthropogenic stocks into flows of resources within a circular economy.

Mitigating Bias and Improving Professional Decision-Making through Persuasive Training Games

Making accurate, unbiased decisions is critical in high-stakes professions such as law enforcement, intelligence analysis, and medicine, since the decisions can have severe consequences. In this chapter, we discuss what makes persuasive games effective for training professionals to recognize their cognitive biases, improve their knowledge about decision-making biases, and learn ways of mitigating bias. We describe our experience designing three games for professional training in cognitive biases and deception detection. This chapter focuses on the combination of decisionmaking, education, and game theories that drives our design. This is then followed by a discussion of our experiments and measurements for testing the effectiveness of our designs.

BOUNDED RATIONALITY IN DECISION MAKING: AN ANALYSIS OF THE DECISION-MAKING BIASES

Decision-making is a multidisciplinary and ubiquitous phenomenon in organizations, and it can be observed at the individual, group, and organizational levels. Decision making plays, however, an increasingly important role for the manager, whose cognitive competence is reflected in his ability to identify potential opportunities, to immediately detect and solve the problems he faces, and to predict and prevent future threats. Nevertheless, to what extent do managers of the most diverse sectors and industries continue to rely on false knowledge when they have better strategies at their disposal? The present article proposes, through the application of bibliographically based instruments, the diagnosis of three prominent biases – overconfidence, optimism, and anchoring effect – in managers of the Portuguese port sector, as well as also seeking to establish a comparative analysis with the conclusions already documented in relation to the Brazilian civil construction sector. In addition, and in view of the results obtained, this paper also provides a set of measures capable of contributing to the mitigation of the effects of these and other biases, and, in this way, to the improvement of the decisions of said managers.

A circuit mechanism for decision-making biases and NMDA receptor hypofunction

Decision-making biases can be features of normal behaviour, or deficits underlying neuropsychiatric symptoms. We used behavioural psychophysics, spiking-circuit modelling and pharmacological manipulations to explore decision-making biases during evidence integration. Monkeys showed a pro-variance bias (PVB): a preference to choose options with more variable evidence. The PVB was also present in a spiking circuit model, revealing a potential neural mechanism for this behaviour. To model possible effects of NMDA receptor (NMDA-R) antagonism on this behaviour, we simulated the effects of NMDA-R hypofunction onto either excitatory or inhibitory neurons in the model. These were then tested experimentally using the NMDA-R antagonist ketamine, a pharmacological model of schizophrenia. Ketamine yielded an increase in subjects’ PVB, consistent with lowered cortical excitation/inhibition balance from NMDA-R hypofunction predominantly onto excitatory neurons. These results provide a circuit-level mechanism that bridges across explanatory scales, from the synaptic to the behavioural, in neuropsychiatric disorders where decision-making biases are prominent.

The impact of legal expertise on moral decision-making biases

Traditional and mainstream legal frameworks conceive law primarily as a purely rational practice, free from affect or intuition. However, substantial evidence indicates that human decision-making depends upon diverse biases. We explored the manifestation of these biases through comparisons among 45 criminal judges, 60 criminal attorneys, and 64 controls. We examined whether these groups’ decision-making patterns were influenced by (a) the information on the transgressor’s mental state, (b) the use of gruesome language in harm descriptions, and (c) ongoing physiological states. Judges and attorneys were similar to controls in that they overestimated the damage caused by intentional harm relative to accidental harm. However, judges and attorneys were less biased towards punishments and harm severity ratings to accidental harms. Similarly, they were less influenced in their decisions by either language manipulations or physiological arousal. Our findings suggest that specific expertise developed in legal settings can attenuate some pervasive biases in moral decision processes.