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When entrepreneurs create new ventures, they struggle with making consequential decisions under severe restrictions such as tight deadlines, limited resources, and lack of information. Making challenging decisions inherently requires creativity as entrepreneurs improvise and work around the limitations they face. Under these conditions, entrepreneurs resort to their heuristics and biases instead of rational decision models. Entrepreneurs employ – sometimes for better and sometimes for worse – a myriad of rule-setting heuristics and experience-based biases to navigate the difficult path between novelty and utility. In this chapter, the authors answer Shepherd, Williams, and Patzelt’s (2015) call for research into how entrepreneurs leverage heuristics and biases in decision-making and the benefits they gain as a result. The authors explore how entrepreneurs introduce heuristics and biases at different stages of their decision-making process using a qualitative study of 21 new ventures. The results attest to entrepreneurs’ ingenuity and creativity in managing complexity, ambiguity, and uncertainty.

Although heuristics and biases seal the fate of entrepreneurial enterprises by directly influencing entrepreneurs’ decisions, previous studies have ignored the role of gender in this regard by considering female and male entrepreneurs homogeneous in their susceptibility to heuristics and biases. Thus, this paper aims to advance the existing body of knowledge on heuristics and biases in the field of entrepreneurship by exploring two heuristics of affect and representativeness as well as three biases of overconfidence, escalation of commitment and illusion of control in female and male entrepreneurs’ entry and opportunity-related decisions.

The data were gathered through semi-structured and in-depth interviews with ten male and nine female Iranian techno-entrepreneurs active in advanced medicine and biotechnology. The gathered data were analyzed by thematic and narrative data analysis.

According to the results, while both male and female entrepreneurs show certain heuristics and biases, there are some noteworthy distinctions. More precisely, contrary to their male counterparts, the female entrepreneurs neither rely on the representativeness heuristic nor show any signs of the escalation of commitment in their decisions.

There are some valuable implications emanated from this study which could be of use for not only future researchers but also entrepreneurs, especially the ones founding and running small businesses themselves.

While there is a strong body of literature on heuristics and biases in the field of entrepreneurship, previous studies have considered female and male entrepreneurs homogeneous in their proneness to heuristics and biases. Thus, the current study enriches the body of knowledge by being the first comparative study of heuristics and biases in female and male entrepreneurs’ decisions.

This study furthers the body of knowledge on entrepreneurial decision-making, entrepreneurial marketing and female entrepreneurs by exploring practical implications of heuristics and biases in female entrepreneurs’ marketing decisions. Heuristics and biases influence many entrepreneurial decisions. Moreover, some of the most important entrepreneurial decisions are marketing-related. Given that the entrepreneurial marketing behavior emanates from entrepreneurial thinking and decision-making, one may conclude that female entrepreneurs’ marketing decisions are susceptible to heuristics and biases. This paper aims to explore the outcomes of heuristics and biases in entrepreneurial marketing decisions.

Data were collected by conducting semi-structured interviews with 19 Iranian female biotech entrepreneurs and analyzed by thematic analysis.

The findings indicate that introducing pioneering products to the market, overestimating product’s market appeal, unprepared entry, underestimating the competition, overcoming entry impediments, entry postponement, growth, success in incremental innovation and failure in radical innovation are the main outcomes of the identified heuristics and biases in the female entrepreneurs’ marketing decisions.

This paper has some precious practical implications for marketers as well as female entrepreneurs running small businesses. Generally speaking, reducing the negative impacts of the identified heuristics and biases of this study while enhancing their positive effects will increase the chances of female entrepreneurs to compete and succeed in tumultuous markets. Furthermore, our most important managerial implication is regarding overconfidence, which was very common in the female entrepreneurs’ marketing decisions by having various positive and negative outcomes. Thus, female entrepreneurs should be careful of this fateful bias in their decisions by knowing the most common signs of overconfidence.

This paper is unique because of not only identifying the main heuristics and biases but also their major outcomes in entrepreneurs’ major marketing decisions. Moreover, this paper is a pioneer in exploring heuristics and biases in female entrepreneurs’ decisions.

Behavioral research is an accepted research paradigm in business disciplines outside of finance including management, marketing and accounting. This paper looks at these disciplines and proposes goals for increasing acceptance of this form of research in real estate. Primary goals include investigation of actual heuristic use, concentration on expert decision makers, either as a group or in comparison to novices, incorporation of additional theory advocating functional heuristics, incorporation of real estate specific theory and identifying both theoretically and empirically when, why and how heuristic use may bias the decision process.

Heuristics are used in the judgment and decision-making process of bank employees; however, discussions and research on the type or range of judgmental heuristics are very difficult to find throughout the world. In light of this, the purpose of this paper is to empirically analyze what types of heuristics are used in bank employees’ judgment and decision-making processes and the extent to which those types of heuristics prevent rational decision making due to the systematic biases they generate. In particular, this study aims to conduct empirical research based on various scenarios related to the banking industry.

To examine the heuristics in decision-making circumstances and the level of subsequent biases, the present study narrowed the scope of research to the three main types of heuristics introduced by Tversky and Kahneman (1974), namely, representativeness heuristics, availability heuristics and anchoring and adjustment heuristics. To analyze the bank employees’ decision making, this study specifically investigated the level of decision-making heuristics and the level of bias by focusing on these three types of heuristics. This study targeted bank employees who either sell financial products or are engaged in customer service work at a real/physical bank.

For representativeness heuristics, this study found bank employees’ judgment of probability was influenced by biases, such as insensitivity to prior probability, insensitivity to sample size, misconception of chance and insensitivity to predictability. Regarding availability heuristics, it found that bank employees judge the probability of events based on the ease of recalling an event instead of the actual frequency of the event, and so they fall prey to systematic biases. Finally, regarding anchoring and adjustment heuristics, this study found that employees fall prey to judgment biases as they judge the probability of conjunctive events and disjunctive events based on anchoring and insufficient adjustment.

Although people who are well-trained in statistics can avoid rudimentary errors, they fall prey to biased judgment at a similar level to those who are not properly trained in statistics when it comes to more complicated and ambiguous issues. It clearly indicates that it is risky to determine that financial experts would be more rational than the general public in making various judgments required in the policy-making process. To conclude, it is imperative to recognize the existence of heuristics-based systematic biases in the judgment and decision-making process and, furthermore, to reinforce the education and training system to improve bank employees’ rational choice and judgment ability.

This article aims to clarify the mechanism by which heuristic-driven biases influence the entrepreneurial strategic decision-making in an emerging economy.

Entrepreneurs' heuristic-driven biases have been measured using a questionnaire, comprising numerous items, including indicators of entrepreneurial strategic decision-making. To examine the relationship between heuristic-driven biases and entrepreneurial strategic decision-making process, a 5-point Likert scale questionnaire has been used to collect data from the sample of 169 entrepreneurs who operate in small- and medium-sized enterprises (SMEs). The collected data were analyzed using SPSS and Amos graphics software. Hypotheses were tested using structural equation modeling (SEM) technique.

The article provides empirical insights into the relationship between heuristic-driven biases and entrepreneurial strategic decision-making. The results suggest that heuristic-driven biases (anchoring and adjustment, representativeness, availability and overconfidence) have a markedly negative influence on the strategic decisions made by entrepreneurs in emerging markets. It means that heuristic-driven biases can impair the quality of the entrepreneurial strategic decision-making process.

The article encourages entrepreneurs to avoid relying on cognitive heuristics or their feelings when making strategic decisions. It provides awareness and understanding of heuristic-driven biases in entrepreneurial strategic decisions, which could be very useful for business actors such as entrepreneurs, managers and entire organizations. Understanding regarding the role of heuristic-driven biases in entrepreneurial strategic decisions may help entrepreneurs to improve the quality of their decision-making. They can improve the quality of their decision-making by recognizing their behavioral biases and errors of judgment, to which we are all prone, resulting in a more appropriate selection of entrepreneurial opportunities.

The current study is the first to focus on links between heuristic-driven bias and the entrepreneurial strategic decision-making in Pakistan—an emerging economy. This article enhanced the understanding of the role that heuristic-driven bias plays in the entrepreneurial strategic decisions and more importantly, it went some way toward enhancing understanding of behavioral aspects and their influence on entrepreneurial strategic decision-making in an emerging market. It also adds to the literature in the area of entrepreneurial management specifically the role of heuristics in entrepreneurial strategic decision-making; this field is in its initial stage, even in developed countries, while, in developing countries, little work has been done.

The purpose of this article is to clarify the mechanism by which underconfidence heuristic-driven bias influences the short-term and long-term investment decisions of individual investors, actively trading on the Pakistan Stock Exchange.

Investors' underconfidence has been measured using a questionnaire, comprising numerous items, including indicators of short-term and long-term investment decision. In order to establish the influence of underconfidence on the investment decisions in both the short and long run, a 5-point Likert scale questionnaire has been used to collect data from the sample of 203 investors. The collected data were analyzed using SPSS and AMOS graphics software. Hypotheses were tested using structural equation modeling technique.

This article provides further empirical insights into the relationship between heuristic-driven biases and investment decision-making in the short and long run. The results suggest that underconfidence bias has a markedly negative influence on the short-term and long-term decisions made by investors in developing markets. It means that heuristic-driven biases can impair the quality of both short-term and long-term investment decisions.

This article encourages investors to avoid relying on cognitive heuristics, namely, underconfidence or their feelings when making short-term and long-term investment strategies. It provides awareness and understanding of heuristic-driven biases in investment management, which could be very useful for finance practitioners' such as investor who plays at the stock exchange, a portfolio manager, a financial strategist/advisor in an investment firm, a financial planner, an investment banker, a trader/broker at the stock exchange or a financial analyst. But most importantly, the term also includes all those persons who manage corporate entities and are responsible for making its financial management strategies. They can improve the quality of their decision-making by recognizing their behavioral biases and errors of judgment, to which we are all prone, resulting in more appropriate investment strategies.

The current study is the first to focus on links between underconfidence bias and short-term and long-term investment decision-making. This article enhanced the understanding of the role that heuristic-driven bias plays in the investment management and more importantly, it went some way toward enhancing understanding of behavioral aspects and their influence on the investment decision-making in an emerging market. It also adds to the literature in the area of behavioral finance specifically the role of heuristics in investment strategies; this field is in its initial stage, even in developed countries, while, in developing countries, little work has been done.

This paper aims to show how overconfidence influences the decisions and performance of individual investors trading on the Pakistan Stock Exchange (PSX), with the mediating role of risk perception and moderating role of financial literacy.

The deductive approach was used, as the research is based on the theoretical framework of behavioural finance. A questionnaire and cross-sectional design were employed for data collection from the sample of 183 individual investors trading on the PSX. Hypotheses were tested through correlation and regression analysis. The Baron and Kenny method was used to test the mediation effect of risk perception and the moderation effect of financial literacy. The results of mediation and moderation were also authenticated through the PROCESS and structural equation modelling (SEM) technique.

The results suggest that risk perception fully mediates the relationships between the overconfidence heuristic on the one hand, and investment decisions and performance on the other. At the same time, financial literacy appears to moderate these relationships. The results suggest that overconfidence can impair the quality of investment decisions and performance, while financial literacy and risk perception can improve their quality.

The paper encourages investors to base decisions on their financial capability and experience levels and to avoid relying on heuristics or their sentiments when making investments. It provides awareness and understanding of heuristic biases in investment management, which could be very useful for decision makers and professionals in financial institutions, such as portfolio managers and traders in commercial banks, investment banks and mutual funds. This paper helps investors to select better investment tools and avoid repeating the expensive errors that occur due to heuristic biases. They can improve their performance by recognizing their biases and errors of judgment, to which we are all prone, resulting in better investment decisions and a more efficient market. The paper also highlights the importance on relying on professional knowledge, giving it greater weight than feelings and biases.

The current study is the first to focus on links between overconfidence, financial literacy, risk perception and individual investors' decisions and performance. This article enhanced the understanding of the role that heuristic-driven bias plays in the investment management, and more importantly, it went some way towards enhancing understanding of behavioural aspects and their influence on the investment decision-making and performance in an emerging market. It also adds to the literature in the area of behavioural finance specifically the role of heuristics in investment strategies; this field is in its initial stage, even in developed countries, while, in developing countries, little work has been done.

The present paper’s aim lies in providing an empirical analysis of whether the loan officers’ psychological traits display an explanation of their subjective prediction accuracy.

A qualitative and qualitative analysis has also been applied.

The reached results reveal that, with respect to microfinance institutions, the loan officers’ accurate subjective judgment crucially relies on the principle of learning-through-experience so as to construct a special type of relevant skills and competences. Learning is both an intellectual and an emotional process, whereby loan officers acquire certain specific experience likely to enhance their cognitive skills and shape their emotional intelligence, which would, in turn, sharpen their forecasting accuracy. In fact, the higher emotional intelligence is, the easier it makes it for loan officer to adjust or reduce their judgmental errors and make a more effective application of the pertinent heuristics. Conversely, however, the lack or absence of emotions and feelings of novice loan officer is likely to hinder and inhibit the cognitive as well as the learning processes.

The paper considers the role of individual psychological traits on the decisions of experienced and inexperienced individuals when deciding on the default risk in the context of loan decisions. Learning is both an intellectual and an emotional process, whereby loan officers acquire certain specific experience likely to enhance their cognitive skills and shape their emotional intelligence, which would, in turn, sharpen their forecasting accuracy.