Decision-making under extreme uncertainty: Eristic rather than heuristic
Purpose – This paper aims to introduce eristic decision-making in entrepreneurship. A decision is eristically made when it utilizes eristics, which are action-triggering short-cuts that draw on hedonic urges (e.g. sensationseeking). Unlike heuristics, eristic decision-making is not intendedly rational as eristics lead to decision-making without calculating or even considering the consequences of actions. Eristics are adaptive when uncertainty is extreme. Completely novel strategies, nascent venturing, corporate venturing for radical innovation and adapting to shocks (e.g. pandemic) are typically subject to extreme uncertainties. Design/methodology/approach – In light of the relevant debates in entrepreneurship, psychology and decision sciences, the paper builds new conceptual links to establish its theoretical claims through secondary research. Findings – The paper posits that people adapt to extreme uncertainty by using eristic reasoning rather than heuristic reasoning. Heuristic reasoning allows boundedly rational decision-makers to use qualitative cues to estimate the consequences of actions and to make reasoned decisions. By contrast, eristic reasoning ignores realistic calculations and considerations about the future consequences of actions and produces decisions guided by hedonic urges. Originality/value – Current entrepreneurial research on uncertainty usually focuses on moderate levels of uncertainty where heuristics and other intendedly rational decision-making approaches pay off. By contrast, this paper focuses on extreme uncertainty where eristics are adaptive. While not intendedly rational, the adaptiveness of eristic reasoning offers theoretically and psychologically grounded new explanations about action under extreme uncertainty.