[HN Gopher] Persist or let it go: a study of entrepreneurial dec... ___________________________________________________________________ Persist or let it go: a study of entrepreneurial decision making Author : sgfgross Score : 78 points Date : 2022-05-28 15:56 UTC (7 hours ago) (HTM) web link (www.sciencedirect.com) (TXT) w3m dump (www.sciencedirect.com) | [deleted] | kadenwolff wrote: | Water is wet | cato_the_elder wrote: | Descartes put it well: "Good sense is, of all things among men, | the most equally distributed; for every one thinks himself so | abundantly provided with it, that those even who are the most | difficult to satisfy in everything else, do not usually desire a | larger measure of this quality than they already possess." [1] | | Entrepreneurs are no exception. | | However, I don't think entrepreneurs have a reputation of being | infallibly rational. Scientists are much closer to having that | kind of status, so I think studying their irrationality would be | more interesting. | | [1]: https://www.goodreads.com/quotes/1013067-good-sense-is-of- | al... | atty wrote: | I don't think the general public sees entrepreneurs as | inherently rational, but many entrepreneurs, especially Silicon | Valley types, certainly think that of themselves. | | Edit: typo | montefischer wrote: | Agreed. The American cultural conception of entrepreneurship | includes delusion, failure, unethical behavior (recent TV | series come to mind). | | Scientists and possibly medical professionals are still | intuitively treated as rational and correct. Just think about | how people shorting consensus medical or scientific opinion are | treated in popular media / society compared to those | criticizing entrepreneurs and capitalists. | chrisco255 wrote: | I don't imagine that science can be very rational if it is | not open to criticism. | whatshisface wrote: | I think you got your use of the words criticizing and | shorting swapped around. :-) (not that I wouldn't love to be | able to short studies that I think will be understood in the | fullness of time to be flawed.) | nthypes wrote: | I don't think the study says anything particularly surprising. | It's well known that people are often not as rational as they | think they are, and this is especially true of entrepreneurs. | They are often so confident in their own abilities and judgment | that they fail to see when they are making mistakes. This can | lead to them making poor decisions and ultimately to the | failure of their businesses. | kosyblysk666 wrote: | humans are irrational beings by default. | jeffchuber wrote: | now do humanity | [deleted] | otikik wrote: | I would bet that applies to most humans (who see themselves as | rational) | katzgrau wrote: | Well, as an entrepreneur who is 10 years into a venture where | most of my mentors thought my time was better spent on whatever | was hot at the time (big data?) I can say that the perception of | rationality is, like all things really, very subjective. | | I see something and they don't. I think I'm right and they think | they're right. But I see what I see, and I want to go for it. I | might end up being wrong, but ultimately the journey to that | particular place is one of the sincerest forms of self expression | I've found, and I can't do that as easily if I too heavily depend | on the eyes of others. | Pearse wrote: | I really appreciate this comment, thanks for sharing | mathgladiator wrote: | > ultimately the journey to that particular place is one of the | sincerest forms of self expression I've found | | This hits me hard, and thank you for expressing it. | | I'm currently building a strange SaaS which brings me joy. I | have no customers and a handful of people that have tried it | out. I promote it here on HN every chance I get as I am | shameless. It's called Adama ( https://www.adama-platform.com/ | ) and it started as a way to build online board games. | | Now, I have no idea how to market it, and I'm still developing | it on variety of fronts. My focus is super diluted and chaotic, | and I try to reign it only to discover more shiny things. | | The true beauty of life is that there no right way to | experience it. When viewed through the lens of an artist, much | is subjective. Who is to say my idea is bad? Well, yeah, it is | full of silliness, but that's the fun of it. Perhaps, I am | wasting my life, but what then is the point of life? | | I've come to believe that faith (which I sorely lack in a | spiritual sense) is an important part of being human. I have | faith that Adama is a great way for me to spend my time, and | I'm currently trying to embrace the creative side of life. | Beldin wrote: | Indeed, a key point is the definition of rationality. You can | argue that everyone acts rational: they make choices based on | some internal logic that makes sense to them at the time of | decision-making. Whether that is the flip of a coin (Twoface) | or even what seems most fun and chaotic to them at that moment | (Joker). | | As far as I know, the fact that the logic used needn't be | consistent was already known from psychology (people can | provide a motivation for their choices relying on arguments | that cannot possibly have actually factored in to their | decision-making process). | | So that also applies to entrepreneurs, apparently. | robonerd wrote: | The best anybody can aspire to is being rational some of the | time; no human is rational all of the time. Anybody who thinks | they're rational all the time is only demonstrating just how | irrational they are, by believing something so irrational about | themselves. | dang wrote: | URL changed from https://oa.mg/blog/persist-or-give-up/, which | points to this. | | I've also changed the title in an attempt to avoid the shallow- | generic style of comment which this thread has unfortunately | filled up with. (Submitted title was "Study shows entrepreneurs | who see themselves as rational, aren't always rational".) The | paper's own title isn't likely to lead to any better discussion, | since we all know the answer already, or assume we do. | spamizbad wrote: | Surprised entrepreneurs prize this so much. I feel like being | irrational is a necessary ingredient to starting a successful | business. The rational don't bother trying or give up too | quickly. | imwillofficial wrote: | Study also shows grass is green and the sky is blue, news at 11 | [deleted] | giantg2 wrote: | Are there any studies showing any group of professionals is | rational? | | We even end up labeling the most rational people as having some | sort of disorder... | FredPret wrote: | Water wet, more at 7 | jokoon wrote: | I did a six months entrepreneurship training, it's all delusional | marketing and advertising. | | https://i.redd.it/zh9yzqmdehc31.jpg | | Turning customers into fanatics, the marketing funnel, a brand | into religion, this is entrepreneur 101. | kodah wrote: | Personally, in my thirties, I don't believe most people are | rational in any consistent way. I think people that are perceived | as rational tend to have good filtering and pushback mechanisms | available to them, which also entails cultivating a friend-group | that will provide those things without judgement and elevate you | for the outcomes rather than the minutiae in between. | readme wrote: | also in my thirties and i am convinced humans are vulnerable | more than most people are willing to admit | | i believe given the right circumstances a healthy adult could | be made to believe complete lies | | where have I seen this in history.... | WJW wrote: | Pretty much everywhere in history? | Enginerrrd wrote: | Pretty much everywhere IN THE PRESENT. When reading this | statement, people will immediately come to mind with | several canonical examples. What's funny is, those examples | will almost invariably be targeted at the political | opposition in a way that's almost diametrically opposed. | | People, throughout history and the present, share some | things in common: a strong affinity for contempt over other | groups of people leading them to all manner of false belief | and irrationality, and a certainty over their own | correctness. | | And in saying that... Here I am, expressing contempt over | some poorly defined group of people with some hint of a | suggestion that I am immune. | voxl wrote: | Funny, also in my thirties, I view almost-everyone as almost- | always rational. The issue is instead in the analysis, which | leaves out externalities or associated risks that the | "specification of rationality" doesn't take into account. I've | really never encountered a person who made an irrational | decision, just one where I didn't fully understand the total | calculus going on in their head. | ACow_Adonis wrote: | almost out of my thirties, consider myself perpetually | interested in chasing and studying rationality for the last | 25 years or so, and consider most of the population | certifiably insane and I'm an alien anthropologist ferrying | between mental institutions. | | It's not all bad though, on a lot of the empirical economic | work I've done a lot of people appear what I'd call "weakly | locally rational": a rationality effect seems to effect | people in aggregate and determines the direction they move, | and tends to be the biggest effect, though the aggregate | doesn't move perfectly in accordance with what rationality | would expect. It also depends very much on framing: they are | "locally majority rational" in the context of their frame of | reference, but not in terms of the macro-world: which makes | sense, because we're finite creatures who can't actually take | in all the information, have limited processing ability, and | each have different access to information and historical | experiences. so most of us do the best with the limited | experience of what we got and how we understand the world. | rilezg wrote: | Everyone is rational based on their understanding of the world, | but no one has perfect understanding of everything. | nanidin wrote: | I captured this on my whiteboard as "Be open minded to the fact | that you're not always open minded." | nanidin wrote: | Or also, from George Bernard Shaw, "The reasonable man adapts | himself to the world: the unreasonable one persists in trying | to adapt the world to himself. Therefore all progress depends | on the unreasonable man." | | Rational & reasonable are relative. | friedman23 wrote: | Paradoxically, you can't be a human and be rational and consider | yourself to be rational. You need to work within the limits of | the human mind and body. Depending on the circumstances of your | body your bias, impulses, and ability to rationalize things | changes completely. | Jensson wrote: | A rational interpretation of the question "are you rational?" | is if you are rational relative to other humans, not that you | are a theoretically perfect rational being. Same thing as how | "are you tall?" means relative to humans, if you answer "I'm | not tall, a skyscraper is tall! No human is tall!" then you | didn't understand the question. | robonerd wrote: | > _A rational interpretation of the question "are you | rational?" is if you are rational relative to other humans, | not that you are a theoretically perfect rational being._ | | Experience with people who tout their own rationality has | shown me that such people rarely recognize the limits of | their rationality. More often than not, they think themselves | some sort of rational demigod gracing the irrational masses | with their very presence. | Jensson wrote: | Yes, which is why you shouldn't trust what people say about | themselves, and why sometimes you shouldn't say things that | are true about yourself since people will take it the wrong | way. You find many smart people not calling themselves | smart, because many people think that smart people | shouldn't call themselves smart, so the smart thing to do | is to say that you just were lucky or worked hard etc, | because that is what people want to hear. | | Meta communication like that makes it really hard to gather | much information from what people say though, but there is | still some informational value in it. If you find some | statistical correlation between people saying they have | attribute X and what they do otherwise, then that means | something. For example, people who are good at X tend to | say that they are good at X. Not everyone who is good at X | will say it, and some who are bad at X will say they are | good anyway, but it still adds some bits of information you | can use. | mistercheph wrote: | Group B believes it has evidence that Group A might be | irrational, publishes findings in magazine. | [deleted] | MaysonL wrote: | One of my favorite t-shirts has the motto: "I'm not delusional. | I'm an entrepreneur." | | From the gapingvoid group. | | https://www.gapingvoid.com/?s=I%27m+not+delusional | LoveGracePeace wrote: | What aren't always rational, studies or entreprenenurs? | robonerd wrote: | Everything and everyone. | [deleted] | sgfgross wrote: | Entrepreneurs. | Isamu wrote: | In general, both. | n_time wrote: | Rationality is a tool not a state of being. | dgfitz wrote: | This just in: studies show that people who see themselves as | rational, aren't always rational. | BurningFrog wrote: | "Studies show entrepreneurs are people" was my first thought :) | hk__2 wrote: | We can make a generator: "Study shows that X who see themselves | as Y, aren't always Y." | wardedVibe wrote: | I mean, the whole point of entrepreneurship is to focus on the | upside and have protection from the personal risk of ruin, so | it's not surprising that it would distort their thinking | generally. | | > entrepreneurs create a decision rule comprising a limited set | of factors (e.g., the potential for growth) and selectively focus | on these factors while paying less attention to and/or ignoring | others (e.g., risk of going into default, period of | underperformance). | md224 wrote: | I really dislike the concept of "rationality", or at the very | least the way it gets used. I'm sure there are cases where | everyone would agree that someone is behaving irrationally, but a | lot of the time the label of "irrational" hides assumptions about | value and tolerance for risk. | | If an entrepreneur decides to prioritize certain factors over | others, who's to say that's "irrational"? Is there an objectively | correct way to run a business? I just find the whole idea so | tiresome. | Zondartul wrote: | "Rational" doesn't mean correct, it only means "logical". For | example, a neural net for discriminating between cats and dogs | is, in general irrational - and yet it does so better than | anything based on pure symbolic logic. | | Humans are inherently irrational. We try to emulate rational | behavior because a logic gives us certainity and lets us feel | secure about the outcomes, but we are physically incapable of | acting in a logical way for several reasons. We don't have | enough data to make a fully justified decision in every | situation, and if we did, it would still cost too much energy | for our meat brains to actually compute those decisions. | | So we approximate rational behavior, making statistical | guesses. With enough data (experience), those guesses are good. | Other times, your guesses are bad. Sometimes you have barely | any data at all and are forced to choose between several | options that all carry risks, so you go with your instinct. Is | it rational? No, but it might have been the least bad choice, | as in real-world, real-time situations, failure to make any | choice whatsoever is itself a choice, and usually a bad one. | | ps: I come from the AI field so I have no idea how any of this | relates to economics. | Beldin wrote: | > _For example, a neural net [...] is, in general irrational_ | | I'd argue the opposite. | | Rationality is using a reasoned approach to decision making. | In a neural net, that reasoning is embedded in the net. You | may disagree with its conclusion or its internal steps, but | it does follow a clear line of reasoning. | nicoburns wrote: | Rational actually seems to have several meanings. The two | most common ones being "reasoned" (thought through | logically), which seems to be the meaning you are thinking of | and "correct" (making a good decision given the information | available). | | Many bad arguments are made due to conflating these meanings. | So much so that I inclined to agree with the grandparent that | talking about things being "rational" or not isn't very | helpful. | whatshisface wrote: | There are objective standards for rationality, although we | rarely have enough information to evaluate other people | according to them. One example of an objective standard is | whether or not all of the things you say have a fifty-fifty | chance of happening, taken together, do indeed happen half the | time. Another objective standard is whether or not you change | your stated goals after the fact to make yourself feel more | successful. | | There are no end of objectively irrational behaviors, although | we rarely have enough insight into other people's lives to | identify them, or the clarity of mind, accuracy of memory and | commitment to reflection to see them in ourselves. | nicoburns wrote: | I don't think it's as objective as you think. There are many | circumstances where someone might make a completely rational | decision while still being utterly wrong, because they didn't | have the information available to them to make a better | decision. | colechristensen wrote: | What? This seems to be biased towards success, you're only a | rational entrepreneur if you end up being successful, and | undertaking a venture without a positive expected value is | irrational. | | Something like telling a person that went to Las Vegas, did some | gambling, had a good time, and lost money that they're irrational | and enjoyed their vacation wrong. | photochemsyn wrote: | Rational actor theory is one of those 'fundamentals of modern | neoclassical economics' things that makes the whole discipline | look patently ridiculous. Here's a good discussion of the issue, | and some remedies: | | https://historynewsnetwork.org/article/158361 | | > "Historians can remedy this. They can enrich economic analyses | by tracing the rise and fall of particular emotions and emotional | norms, for many feelings have prompted capitalist behavior and | should be studied historically. We need a social history of | selfishness--the feeling presumed to be central to market | behavior. The word selfish entered the English language only in | the 1640; self-interest joined it in 1649. That new words were | created suggests that new behaviors--as well as concerns about | them--developed as markets expanded." | nicholast wrote: | You can't evaluate rationality in context of small number of | samples of a fat tailed distribution with wide uncertainty bands. | Besides, startups can be a kind of success even in failure based | on opportunities that arise as a result. | SnowHill9902 wrote: | How do you define rational? | togaen wrote: | That seems... obvious. | [deleted] | marcodiego wrote: | Dunning Krugger effect? | evrydayhustling wrote: | In other news, self-described philanthropists often run predatory | businesses, those espousing family values are often philanderers, | and defense departments plan wars. Welcome to humans! | irthomasthomas wrote: | "family values" is a dog whistle for Christian values. But | you're still right. | cato_the_elder wrote: | No. Family values are much more universally accepted than | Christianity. Also, Christianity isn't a taboo, so no one | needs to "dog whistle" anything about it. | throw__away7391 wrote: | "Family Values" is most certainly a dog whistle for | Christianity, particularly when Christians are attempting | to smuggle religiously motivated ideas into public policy | and especially during the George W Bush era. Variations on | this phrase are incorporated into the names of many, many | evangelical political organizations and publications. | cato_the_elder wrote: | It is true that almost all Christians are proponents of | family values. But it's in no way exclusive to them. For | example, a Muslim would probably support very similar | ideas. | throw__away7391 wrote: | No, that's wrong. The phrase "family values" is _very | strongly_ tied to Evangelical Conservative politics, and | particularly to the neocons who waged a literal war on | Muslims soon after coming to power. You 've got a bible | verse as your bio so I think I can hazard a guess as to | your position. | | The Google Ngram graph on this phrase is interesting: | | https://books.google.com/ngrams/graph?content=family+valu | es&... | cato_the_elder wrote: | > particularly to the neocons who waged a literal war on | Muslims soon after coming to power. | | I don't have a lot of sympathy with neocons, but I'm | pretty sure their attacks on Muslims weren't because they | thought Muslims were destroying family values or | something. | | > You've got a bible verse as your bio so I think I can | hazard a guess as to your position. | | :-) Yes, but I'm not a Christian. | | The Google Ngram is certainly interesting. But my counter | argument is that before the 60s, family values were so | ingrained in society that they weren't subject to much | debate. | Dylan16807 wrote: | > Also, Christianity isn't a taboo, so no one needs to "dog | whistle" anything about it. | | As a direct justification for US laws, religion is taboo. | Family values are dog whistled all the time in that | context, and in other contexts where someone wants to | pretend that their particular interpretation is just common | sense regardless of big religious factors. | cato_the_elder wrote: | > As a direct justification for US laws, religion is | taboo. | | Not really, unless something half the population believes | can be a taboo. [1] (It might be a taboo in some subsets | of the population though) | | [1]: https://www.pewresearch.org/fact- | tank/2020/04/13/half-of-ame... | [deleted] | [deleted] | Jensson wrote: | > Contrary to expectations, we find that self-proclaimed highly | rational entrepreneurs do not (always) behave rationally | | Not sure what they thought, did they expect that every | entrepreneur who says they are highly rational actually are | highly rational? | readme wrote: | in some notable cases entrepreneurs who seem themselves as | rational are almost never rational | lkrubner wrote: | I apologize if this counts as a shameless plug, but entrepreneurs | who are self-destructive has been my main theme for several years | now. I wrote a fairly popular book about one particular case, | which I think illustrates the overall problem. "How To Destroy A | Tech Startup In Three Easy Steps" is a detailed look at how a | particular entrepreneur, with a great idea, managed to sabotage | themselves: | | https://www.amazon.com/Destroy-Tech-Startup-Easy-Steps/dp/09... | daenz wrote: | If you give us an example from your writing that relates to the | thread topic, it will seem less of a plug and build more good | will :) | Geee wrote: | It's quite interesting that economy and economic progress doesn't | require rationality, i.e intelligence. Just like in evolution, | randomness, copying of successful strategies and survival of the | fittest are needed for economic progress. Whatever ends up | happening is always post-rational, because everything that is | rational survives. ___________________________________________________________________ (page generated 2022-05-28 23:00 UTC)