Decision Making in Entrepreneurial Finance: A Behavioral Perspective
AbstractCentral questions in entrepreneurship and entrepreneurial finance are briefly discussed and case is made for the need for applying the behavioral finance theories and models to better understand the decision making dynamics that is involved at each stage of the entrepreneurial process. By dissecting a venture's total risk into a "Resident Risk" component and a "Behavioral Risk" component, attempt is made in this writing to introduce a preliminary risk model for evaluating key retrepreneurial decisions like the decision to launch and fund a new venture. Although the focus here is on individual decision making under highly uncertain entrepreneurial environments, but the suggested risk framework and the related discussions can be extended to decision making processes in all other uncertain environment.
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Bibliographic InfoArticle provided by Pepperdine University, Graziadio School of Business and Management in its journal Journal of Entrepreneurial Finance.
Volume (Year): 13 (2009)
Issue (Month): 2 (Fall)
Decision-making; entrepreneurship; entrepreneurial finance; behavioral finance; resident risk; behavioral risk;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
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