Decision-making underSample Page
extreme uncertainty:
eristic rather than heuristic
Rasim Serdar Kurdoglu
Faculty of Business Administration, Bilkent University, Ankara, Turkey
Nufer Yasin Ates
Sabancı Business School, Sabanci University, Istanbul, Turkey, and
Daniel A. Lerner
IE Business School, Madrid, Spain
Abstract
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.
Keywords Extreme uncertainty, Rationality, Eristics, Business venturing, Entrepreneurial decision-making
Paper type Conceptual paper
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.
-George Bernard Shaw
The future is open. It is not predetermined and thus cannot be predicted—except by accident.
-Karl Popper (1994, p. xiii)
Risk and uncertainty are the two major challenges that entrepreneurial decision-makers face
(Shepherd et al., 2015). Under risk, choices are informed by decision calculus as the
availability of probabilistic data enables the use of inferential techniques for decision-making
(Solway and Botvinick, 2012). By contrast, under uncertainty, decision-makers suffer from
the lack of probabilistic data, complicating many entrepreneurial business decisions
(Packard et al., 2017; Peysakhovich and Karmarkar, 2016; Townsend et al., 2018). Yet,
decision-makers often cope with uncertainty satisfactorily by using heuristics, i.e. short-cut
(often intuitive) solutions based on a single or a few cues (Artinger et al., 2015; Huang and
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The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1355-2554.htm
Received 4 July 2022
Revised 18 November 2022
Accepted 15 December 2022
International Journal of
Entrepreneurial Behavior &
Research
Vol. 29 No. 3, 2023
pp. 763-782
© Emerald Publishing Limited
1355-2554
DOI 10.1108/IJEBR-07-2022-0587
Pearce, 2015; Luan et al., 2019; Suarez and Montes, 2019). However, effective use of heuristic
reasoning necessitates substantial experience in the decision-making domain or familiarity
with the problem to identify and judge relevant cues (Dane et al., 2012; Schneckenberg et al.,
2019). When the decision-maker is dealing with a novel situation, uncertainties can be
subjectively extreme for her, such that she endures a lack of meaningful qualitative
information (cues) as well as quantitative information (Kurdoglu et al., 2022). Completely
novel strategies, nascent venturing, corporate venturing for radical innovation and adapting
to shocks (e.g. pandemic) are often subject to extreme uncertainties, which impede not just
quantitative probabilistic calculations but also heuristic methods.
How do entrepreneurs dare to take action under extreme uncertainty? This study suggests
it happens via eristic decision-making, which is not intendedly rational. Eristic decisionmaking involves using eristics rather than heuristics. Eristics are action-triggering short-cuts
that draw on hedonic urges (e.g. sensation-seeking). The authors derived the term “eristic”
from Ancient Greek philosophy, which describes eristic approaches as tools to win without
regard for the truth while describing heuristic approaches as tools to discover the truth
(Kurdoglu and Ates¸, 2022; Nehamas, 1990; Wolf, 2010). Unlike heuristics, which draw on
information in the external environment and intend to capture a realistic assessment of the
decision problem, eristics seek introspective reasons for action. In the absence of qualitative
cues under extreme uncertainty, heuristics cannot properly function. However, eristics still
offer another possibility: Directly following hedonic urges and bypassing an intendedly
rational calculative problem-solving approach. In the short run, eristics can yield immediate
outcome success only by luck as they do not involve setting action based on a reasoned
assessment of the realistic consequences of an action. Yet, even after an immediate failure,
eristics can still be favorable in the long run since they drive action necessary for learning and
exploring opportunities (e.g. Gillier and Lenfle, 2019) – that would not occur if the action were
solely based on an intendedly rational assessment of the likely consequences (e.g. Andersen
and Nielsen, 2009).
Intendedly rational decisions follow a logic of consequence (notwithstanding effectuation
[1]) in which decision-makers calculate (heuristically, logically or probabilistically) the
consequences of available options, assign preferences to those estimated consequences and
choose one of the options with preferable consequences (Cyert and March, 1963; March, 1994;
Simon, 1978). In this regard, heuristic decision-making is essentially intendedly rational
decision-making. By contrast, eristic decision-making is not intendedly rational as eristics
lead to decision-making without consideration of the consequences of actions. Further
definitions and related distinctions are presented in Table 1.
Without eristics, speculation and exploration could be severely limited as human action
would be limited to intendedly rational action directed toward the exploitation of what is
known and what is reasonable rather than an exploration of what is unknown and beyond
reason. Eristics are adaptive for entrepreneurial decision-makers, as they can quickly
ignite exploratory action (rather than inaction) and commitment, transforming a wouldbe entrepreneur into a nascent entrepreneur. Eristics provide the time and opportunity
for exploring and developing learning potential under extreme uncertainty where
rationally assessing, much less predicting, the consequences of an action is futile. As
such, eristic reasoning and its irrationality (like a “reality whatever/be damned” attitude)
can be responsible for propelling entrepreneurial action against all odds. While yet to be
explicated and theoretically framed in terms of eristics, entrepreneurship literature is
indeed no stranger to the potential connection and adaptive role in entrepreneurial decisionmaking. Extant entrepreneurship literature already hints at entrepreneurial eristics (i.e.
eristics that entrepreneurs use for making decisions and initiating entrepreneurial action).
For example:
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(1) Follow your passion (Chen et al., 2009)
(2) Do what you enjoy doing (Ryff, 2019)
(3) Do what excites you the most (Wiklund et al., 2017)
(4) Do what makes you feel less regretful (Summers and Duxbury, 2012)
(5) Do what you feel obliged to do (Ryff, 2019)
(6) Do what your God/ancestors/spirits would expect you to do (Ganzin et al., 2020)
(7) Do someone in your role/position supposed to do (Townsend et al., 2010)
(8) Just do it as you wish/need (Wiklund et al., 2018)
Heuristics Eristics
Definition Smart solutions based on a single or a few
qualitative cues
Action triggering short-cuts based on
impulses or affectual needs
Rationality Intendedly rational by calculating
consequences of action
Intendedly irrational by bypassing
calculating consequences of action
Direction of
reasoning
Problem-solving Directionally motivational self-serving
beliefs
Approach to truth Seeking the truth Apathy (indifference) to the truth (even
extending to self-deception)
Goals of belief
formation
Approximate accuracy (satisficing) Wishful presumptions
Attention External environment (exteroception) Internal (bodily) environment
(introspection)
Sources Experience, learning or inborn
characteristics
Hedonic urges (related to hormonal or
neurological differences)
Most likely benefits Exploitation – High possibility of
immediate success)
Intelligent action
Learning and exploring – Possibility of
future success
Emotionally disinhibited, non-intelligent,
but relieving action
Applicability for
entrepreneurs
Exploitation of known strategies, mature
venture growth, incremental innovation,
expected contingencies
Exploration of completely novel
strategies, nascent venturing, radical
innovation, unexpected shocks
Adaptation to levels
of uncertainty
Moderate uncertainty: Meaningful
qualitative cues exist
Extreme levels of uncertainty:
Qualitative cues are either ambiguous or
totally absent
Biases involved Ignoring some part of the available
information
Overconfidence, status quo bias, loss
aversion and wishful thinking
Emotions involved Sensemaking heuristic emotions: Liking,
enjoying, fearing and surprising
Emotional eristic attachments:
Passionate love or hate
Examples
Recognition heuristic (choosing the
recognized option)

Take the best (choosing an option
which has the most discriminatory
cue)

Imitate the successful

Imitate the majority

Tallying (choosing an option which
has the highest number of positive
cues)

Follow your passion

Do what is exciting

Do what makes you feel less regretful

Do what you feel obliged to do

Do as you are supposed to do

Do as you wish or need

Do as someone brave does
Table 1.
Summary of the
conceptual distinctions
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(9) Do it and everything will be great (Townsend et al., 2010)
(10) Do it as fortune favors the brave (Hayward et al., 2006)
The distinction between heuristics and eristics is an important contribution, as any method
that does not draw on logic or probability is often mistakenly considered a heuristic rule
(Shah and Oppenheimer, 2008). Distinguishing eristics from heuristics is not merely an issue
of nomenclature. The conceptualization of eristics can explain the adaptiveness of nonintelligent decision-making driven by hedonic urges in contrast with intendedly rational
(intelligent) approaches. The concept of eristics can be useful in explaining the adaptive
functions of entrepreneurial passion (e.g. Cardon and Kirk, 2015), emotionally charged (e.g.
Kollmann et al., 2017) and impulsive (e.g. Lerner, 2016; Pietersen and Botha, 2021) decisions in
entrepreneurship above and beyond the adaptiveness of heuristics (cf., Artinger et al., 2015;
Gigerenzer and Gaissmaier, 2011; Sarasvathy, 2001). Identifying eristics is also useful to
reveal “animal spirits’ and the biological roots (cf. Nicolaou et al., 2021) of venturous decisions.
Gigerenzer (2019, p. 3553) assumes that the animal spirits that Keynes (1936) famously refers
to, that is, “our spontaneous urge to action, optimism and hope, all of which make the wheels go
round”, can be identified through studying the adaptiveness of heuristics. However,
Gigerenzer neglects that the pursuit of hedonic urges (through eristics) can better represent
animal spirits than heuristics do, as Keynes indeed refers to decisions that are not intendedly
rational when he describes the animal spirits (Kurdoglu et al., 2022). Similarly, the
identification of eristics can explain what March (2006) describes as seemingly foolish
exploratory actions that occasionally produce profound innovations.
In light of the current debates in entrepreneurship, psychology and decision sciences, the
paper builds new conceptual links to establish its theoretical claims through secondary
research. In what follows, the paper first elaborates on how entrepreneurial decision-makers
adapt to extreme uncertainty through eristics, which is contrasted with adapting to moderate
uncertainty through heuristics. As such, the paper explains the adaptiveness of decisions that
are not intendedly rational. In the second part of the paper, further comparisons are made
between heuristic and eristic decision-making. Besides, the unique features of eristic
reasoning are presented within the context of entrepreneurial decision-making. The paper
concludes by elaborating on the implications of the views suggested in the paper.
Adaptative decision-making under extreme uncertainty
To date, organizational theory, including entrepreneurial action theory, has largely been
predicated on a reasoned judgment perspective (Lerner et al., 2018a; McMullen and Shepherd,
2006) – e.g. realistically (accurately) understand the veracity of a potential opportunity. Yet,
instead of an optimization strategy by probabilistic calculations or an approximation
strategy by heuristics, decision-makers can also adopt a radically different reasoning
motivation and pursue hedonic gains that do not depend on the foreseeable consequences of
an action. This third option, i.e. following eristics, can be particularly adaptive when the
uncertainty level is extreme.
Extreme uncertainty vs Knightian uncertainty
Since Knight’s (1921) seminal book, uncertainty and risk are famously distinguished from
each other. Risks are amenable to quantifiable probabilistic estimations, whereas
uncertainties are not possible to be captured probabilistically with confidence (Artinger
et al., 2015; Packard et al., 2017; Townsend et al., 2018). Under risk situations, mathematical
and probabilistic techniques are effective as they are useful in revealing optimal decisions. By
contrast, under uncertainty, the optimal decision is usually intractable by these techniques
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(Gigerenzer and Gaissmaier, 2011). Probabilistic calculations are not feasible under
uncertainty, as it is not possible to have a closed set of options (alternatives), set of
outcomes or both (Packard et al., 2017). When sample space is unknown, it is impossible to
quantify risks probabilistically. Dealing with such complications, boundedly rational
decision-makers can use heuristics to make calculations to reach “satisficing” (sufficiently
satisfactory based on aspirations) decisions (Simon, 1978).
Heuristic decision-making helps calculations under uncertainty as it shifts or limits
attention to a reduced number of salient variables and lets the decision-maker ignore the rest
(Gigerenzer, 2008). In this respect, heuristics are argued to be ecologically rational, therefore,
adaptive under uncertainty (Gigerenzer and Gaissmaier, 2011; Luan et al., 2019). However, the
level of uncertainty that justifies the use of heuristics is limited to moderate uncertainty.
Heuristics cannot work effectively under extreme uncertainty (Kurdoglu et al., 2022).
However, studies establishing the adaptiveness of heuristics under certainty (e.g. Gigerenzer
and Gaissmaier, 2011) refer to Knightian uncertainty without recognizing different levels/
shades of uncertainty (Arend, 2022). This might be because of Knight’s emphasis on a
moderate level of uncertainty where knowledge is partially available as Knight (1921, p. 199)
argues: “The essence of the situation is action according to opinion, of greater or less
foundation and value, neither entire ignorance nor complete and perfect information, but
partial knowledge”.
Knightian uncertainty (i.e. uncertainty with non quantifiable probabilities) is a broad
concept that can be confusing as it subsumes a spectrum of uncertainty levels. At a level of
Knightian uncertainty, probabilities are not quantifiable, but qualitative cues still exist such
that the decision-maker is able to make a heuristic judgement confidently (i.e. moderate
uncertainty). However, at a higher level of Knightian uncertainty, that is, when uncertainty is
extreme, qualitative cues are either ambiguous or totally absent, which is close to complete
ignorance. Extreme uncertainty is the focus of this present research.
Heuristics cannot be adaptive under extreme uncertainty, as heuristic calculations would
suffer from a lack of meaningful qualitative cues that could provide sufficiently accurate
estimations. Extreme uncertainty indicates the unavailability or weakness of information to
render or trigger meaningful heuristics [2]. That is to say, heuristic cues that can be extracted
from the available information are absent or too weak under extreme uncertainty to
meaningfully formulate an intendedly rational choice (Le Masson et al., 2019). Any heuristic
cues, if available, may even be misleading under extreme uncertainty [3]. For instance, in
assessing the prospects or next steps in developing new technology, heuristics may be
meaningful if innovation is incremental, given the relative proximity and applicability of
previous learning and routines. However, if it is completely a new technology or a radical
innovation, previously formed heuristics will be of negligible utility — it may even be
harmful to generalize old rules of thumb to new contexts. Under extreme uncertainty, the
expected outcome of an action is —and will for some time remain— highly unpredictable.
Thus, extreme uncertainty implies a protracted situation. Otherwise, an information search
could dissipate extreme uncertainty and the situation would turn into moderate Knightian
uncertainty (or even a situation of risk if probabilistic data becomes available). Under extreme
uncertainty, the outcomes cannot be predicted ex ante, leaving the decision-maker
epistemologically highly unconfident about the favorability or unfavourability of her
decision.
When heuristic cues appear too weak or absent to make meaningful inferences about
future and current reality, pursuing truth by heuristic reasoning is apt to be in vain. As such,
under extreme uncertainty, as in many entrepreneurial decisions, particularly at the earliest
stages of the entrepreneurial process (e.g. Schindehutte et al., 2006), one can justifiably forego
attempting to resolve the focal problem by heuristics and give up trying to understand the
environment and instead submit to inner hedonic urges. In this sense, the decision-maker can
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use eristic reasoning to capture other gains that can be achieved without a realistic
assessment of the future and present. Thus, just as heuristic reasoning is adaptive under
moderate uncertainty because of its utility in expected favorable outcomes, its counterpart
eristic reasoning can be similarly adaptive (and even the basis for entrepreneurial action)
under extreme uncertainty because of its utility in triggering action without forming realistic
expectations.
Features of eristics vs heuristics
When Herbert Simon (1955) championed the study of bounded rationality, he described
human cognitive limitations and how the use of heuristics overcomes these limitations. For
instance, Simon (1956) introduced a model of foraging behavior where the forager uses
heuristics to survive in a forest with modest calculations drawing on little information rather
than making elusive utility-maximization calculations. Although the use of heuristics does
not yield optimal outcomes and accordingly maximized utilities for decision-makers, Simon
(1990) posited that heuristics are useful for their ease of use and satisfactory effectiveness in
making intendedly rational and, therefore, adaptive calculations.
Following Herbert Simon’s bounded rationality approach, Tversky and Kahneman (1974)
pioneered the heuristics and biases research program, which empirically demonstrates that
decision-makers are far from utility-maximizers as people often use heuristics leading to biases
causing irrational inferences according to the standards of formal logic and probability.
Behavioral economists accordingly discovered a variety of heuristics (i.e. representativeness,
availability, adjustment and anchoring) that are tainted by biases (cf., Ariely, 2010; Kahneman,
2003; Thaler, 2016). Simon highly appreciated that line of research for demonstrating human
cognitive limitations and the prevalence of heuristics; therefore, he nominated Tversky and
Kahneman for the Nobel Prize (Augier and March, 2003).
However, despite Simon’s endorsement of the heuristics and biases approach, Gigerenzer
(2008) accuses Tversky and Kahneman of misrepresenting Simon’s original vision as he
indicates that many heuristics and their biased information processes are not inferior to
logical and probabilistic calculations under uncertainty. To salvage the status of heuristics,
Gigerenzer and his followers introduced a particular set of heuristics (i.e. the fast and frugal
heuristics) that are demonstrably useful for adaptation to uncertainty. These heuristics can
even outperform analytical methods with their accuracy and efficiency when information is
scarce (Gigerenzer, 2018; Gigerenzer and Gaissmaier, 2011; Gigerenzer and Goldstein, 1996;
Kruglanski and Gigerenzer, 2011).
The proponents of the fast and frugal heuristics approach championed the ecological
rationality concept to describe the adaptive features of heuristics under uncertainty (e.g.
Gigerenzer, 2008). In this respect, a heuristic decision is ecologically rational under uncertainty
because of its sufficient prediction accuracy, efficiency (quickness and affordability) and
frugality (utilizes little information) (Gigerenzer, 2019). The decision is argued to be
ecologically rational if it matches the structure of the environment (cues, criteria and other
information) (Gigerenzer and Gaissmaier, 2011). However, if the fast and frugal heuristics (e.g.
recognition heuristic, take the best, imitate the successful or imitate the majority) are analyzed
(cf., Artinger et al., 2015; Mousavi and Gigerenzer, 2014), it is clear that these heuristics are all
intendedly rational independent of uncertainty. These heuristics are tools for intelligent,
practical calculations helpful to make decisions based on the logic of consequences (cf., Cyert
and March, 1963; Harrison and March, 1984). In this respect, to call them rational, there is no
need to measure their accuracy, frugality or efficiency levels under uncertainty. That is to say,
even when those heuristics fail to produce adaptive outcomes, they still represent the use of
rationality as a mindset, an epistemic stance or a thinking procedure. It is also worth noting
that an irrationally made decision can yield an adaptive outcome, but that does not make it
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rational. The point is that adaptation to uncertainty and rationality are separate issues, as it
is possible to adapt to uncertainty by methods that do not involve intendedly rational
calculations or assessments, especially when the uncertainty is extreme.
While the ecological rationality concept is useful for showing the adaptive benefits of
heuristics, it just conceptually deals with intendedly rational means of adaptation to
uncertainty and excludes other means. It seems that the fast and frugal heuristics approach
ignores irrational means of adaptation to uncertainty as it is exclusively built on Simon’s (e.g.
1955, 1956, 1990) bounded rationality models and the computational theory of mind (cf., Todd
and Gigerenzer, 2003).
When Simon studied bounded rationality, he eventually aimed to develop artificial
intelligence models (Simon, 1995). In a way, he neglected human irrationality and its
adaptiveness as he took “adaptative intelligence” and “artificial intelligence” as synonymous
concepts (cf., Simon, 1983). Simon (1967, 1985) was not ignorant of non-intelligent but
adaptative factors (e.g. passion) present in human cognition. Yet his theory neglects the
importance of factors like passion, unconscious drives and impulsively made decisions, as he
suggested that non-intelligent adaptation is the exception rather than the norm (Simon, 1985).
Simon’s computational theory of mind elegantly captures intendedly rational
decision-making. Yet, growing evidence suggests that people can be subject to irrational
factors such as superstitions (e.g. Bhattacharya et al., 2018), supernatural beliefs (e.g. Boden,
2015), passions (e.g. Toth et al., 2021), wishful thinking (e.g. Seybert and Bloomfield, 2009),
self-deceptive decisions in different forms such as reality-denial or not wanting to know (e.g.
B
enabou and Tirole, 2016) and directionally motivated reasoning in various forms (e.g. Simon
and Shrader, 2012). As motivated reasoning research suggests, individuals tend to distort the
truthfulness of their beliefs, especially when the available information is sufficiently
ambiguous and when the truth is not self-evident (Mishra et al., 2013; Noval et al., 2018).
Similarly, individuals are documented to perceive illusory patterns, including confabulating
conspiracy theories and seeing objects which are not present, when they feel that they lack
control because of uncertainties (Whitson and Galinsky, 2008). As such, it is not reasonable to
assume that people exclusively adapt to uncertainty in an intendedly rational way through
the use of heuristics.
Switching from heuristics to eristics for daring entrepreneurial action
While entrepreneurs usually have a mindset that is different from typical scientists (Kuratko
et al., 2020; Rindova and Courtney, 2020), entrepreneurs are certainly capable of benefiting
from scientific reasoning (Camuffo et al., 2020) as well as heuristic reasoning (Shepherd et al.,
2012). Yet, this paper posits that they do not always pursue truth and they can resort to
eristics to initiate entrepreneurial action under extreme uncertainty, which cannot be
explained by heuristic decision-making.
Intendedly rational use of heuristics requires practical calculative reasoning that focuses
on a single cue or a few cues (and ignores other cues) to make sufficiently accurate (even if
biased) calculations and decisions in an efficient way (cf. Gigerenzer and Brighton, 2009). The
accuracy of such calculations depends on the accuracy of the beliefs that underlie the
calculations. However, people can also form beliefs that are not intended to be accurate at all,
as beliefs can be formed for self-deception, wishful thinking and other forms of directionally
motivated reasoning (cf., Kunda, 1990; Schwardmann and Van Der Weele, 2019; Simon and
Shrader, 2012; Zimmermann, 2020). Such beliefs that are not intended to be accurate support
the switching from the use of heuristics to eristics that biasedly justify certain conclusions
without any reliable cues to support these conclusions.
When individuals do not pursue true perceptions of reality – i.e. accuracy in their
reasoning, they can form adaptive hedonic justifications for action (Mishra et al., 2013), which
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are here posited to be a feature of eristic reasoning. For instance, eristics like “follow your
passion” or “do what excites you the most’ represent the pursuit of hedonic goals enabled by
directionally motivated reasoning. Expecting hedonic pleasures is different from making
calculations about consequences, as one can wishfully form expectations. Neurological
disorders such as ADHD (Attention-deficit/hyperactivity disorder) (Hatak et al., 2021; Lerner
et al., 2018b) can also support using eristics. Likewise, hormones like testosterone can play
their parts (e.g. Bendahan et al., 2015; Norbury and Husain, 2015).
Eristics also allow entrepreneurs to play with their ideas in an unadulterated way [4]. Play is
an inherent aspect of humans as well as other animals (Huizinga, 1955). While extreme
uncertainty brings about anxiety, it can also spark a sense of enjoyable play, just like a daunting
roller coaster experience comes with a thrilling adrenaline rush. After all, “[t]o dare, to take risks, to
bear uncertainty, to endure tension—these are the essence of the play spirit” (Huizinga, 1955, p. 51).
Yet, playing is not merely a hedonic exercise as it can unintentionally help discovery: Eristics that
allow playing with ideas in unpredictable situations may lead to serendipitous business
opportunities and innovations (cf. Austin et al., 2012; Busch and Barkema, 2022).
Research indeed demonstrates that some individuals may take entrepreneurial action and
pursue entrepreneurship for hedonic reasons (Stephan et al., 2020) rather than engaging in a
truthful assessment of their entrepreneurial ideas, the market, legality, etc. Such hedonic
actions are often pursued on impulse, so there simply was not a reasoned assessment prior to
action (Huang, 2018; Lerner et al., 2018a). While such hedonic decisions can lead to
considerable entrepreneurial success (Hunt et al., 2022; Lerner et al., 2018a; Shir et al., 2019;
Simon and Shrader, 2012; Walker et al., 2020), they can also interfere with individuals
successfully capitalizing on opportunities (Cacciotti et al., 2016; Kollmann et al., 2017; Lerner
et al., 2018b; Morgan and Sisak, 2016). In any way, such decisions are quite different from the
heuristic decision-making processes that Gigerenzer and Gaissmaier’s (2011) fast and frugal
heuristics approach outlines.
As the fast and frugal heuristics approach conceived human cognition like an efficient
computer, it cannot explain the adaptiveness of hedonically formed decisions made by
eristics. Likewise, it cannot account for cognitive illusions (Kahneman and Tversky, 1996),
non-consequential decisions (c.f., Bastardi and Shafir, 2000), or hedonic emotional regulations
strategies of people (e.g. Tamir et al., 2008), as well as decisions that are triggered impulsively
by hormonal factors such as dopamine or testosterone (Nicolaou et al., 2018; Norbury and
Husain, 2015). Yet, such decisions can be adaptive for their hedonic features instrumental for
coping with uncertainty. Thus, for adapting to uncertainty, the human mind does not
necessarily deal with intelligent calculations that target accuracy, efficiency and associated
practical problem-solving goals attributed to heuristics.
Another problem is that the fast and frugal heuristics approach focuses on the immediate
success of a decision to call it adaptive and rational. Immediate outcomes can be misleading in
judging the adaptiveness or rationality of a decision. Immediate success (as well as failure) of
a decision does not negate the presence of irrationality in decision-making procedures.
Rationality, adaptiveness and immediate decision-making performance should be analyzed
separately. An irrationally made decision can be hedonically adaptive for coping with
uncertainty, while it can yield failure in the short run. However, an immediate failure can also
be adaptive by producing learning opportunities useful for future outcomes. For instance,
following passions (e.g. Cardon et al., 2009; Fisher et al., 2018) can be an adaptive hedonic
response to uncertainty, as passions can give the courage to face uncertainty. Following
passion might lead to failure in the short run, but it can also lead to entrepreneurial success in
the long run. Likewise, directionally motivated reasoning can help to reduce anxiety (e.g.
Lamba et al., 2020) or create pleasurable feelings (e.g. Mukherjee and Srinivasan, 2021) that
can be useful to dare action under uncertainty.
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As a case in point, consider an entrepreneur who is developing a radically new product
based on newly discovered technology for a market that does not exist yet. These conditions
evade a realistic assessment of entrepreneurial success, yet the entrepreneur can still invest in
the product based on her faith because of the hopes associated with the pursuit (Hayward
et al., 2006, 2010). In this sense, eristic reasoning may be the fuel of entrepreneurial ventures
and useful to dare entrepreneurship despite very high failure rates (cf., Klimas et al., 2021).
Similarly, eristic reasoning can help regulate entrepreneurs’ sense of uncertainty as they wish
(e.g. Griffin and Grote, 2020) so that they can find the drive to continue entrepreneurial action
in the face of extreme and protracted uncertainties. By eristic reasoning, entrepreneurs may
psychologically cope with vague chances of success when pursuing a product idea that
requires radically new technology to target a new (i.e. unestablished) market. In comparison,
most people would eristically refrain from any entrepreneurial action when they face extreme
uncertainty.
Eristics are adaptive under extreme uncertainty, yet they are not necessarily
instrumentally rational (i.e. means to a favorable end). Eristics are adaptive under extreme
uncertainty for their immediate hedonic effects and their possible favorable outcomes
(fortuitous exploration and learning) in the long run. Regardless of the outcomes, the purpose
of eristic reasoning is to pursue a hedonic goal igniting action under extreme uncertainty.
Thus, eristics only provide possibilities of eventual success, while adaptiveness of eristics
under extreme uncertainty is valid irrespective of the eventual consequences. However,
eristics are certainly not adaptive when uncertainty is not extreme, as it would be instead
sensible to use heuristics for intelligently aiming at favorable outcomes. Thus, while the
adaptiveness of heuristics stems from their expected instrumentality (which is feasible to be
aimed at when there is moderate uncertainty), the adaptiveness of eristics stems from the fact
that they do not require estimating the consequences of an action.
It is also important to acknowledge that some eristics may be used in nonadaptive ways as
a cultural habit rather than as a reaction to extreme uncertainty. Just like heuristics can be
learned culturally (Gigerenzer et al., 2022), eristics can be rooted in culture, where some of
them can be remnants of earlier extremely uncertain conditions which are no longer relevant
(Sterelny, 2003). For instance, if an entrepreneur act based on what her God/ancestors/spirits
would expect her to do (e.g. Ganzin et al., 2020) because of cultural pressures, her action may
not even provide any (including hedonic) benefits, particularly when action consequences are
already foreseeable (under moderate uncertainty),
Eristic biases
It is useful to compare the biases involved in heuristics with biases in eristics. By definition of
eristics, the biases for justifying certain conclusions for hedonic reasons rather than
justifying the use of certain cues in a biased way in intendedly rational heuristic calculations
should be attributed to eristic reasoning rather than to heuristic reasoning. The
overconfidence bias, status quo bias, loss aversion and wishful thinking are prime
examples of such biases, as they serve to satisfy hedonic desires at the expense of truth –
because of, for example, emotional attachments to an idea, person, object, or state (cf., Shu and
Peck, 2011). In this respect, overconfidence leads to an untruthful portrayal of oneself.
Similarly, loss aversion stems from pursuing psychological comfort (i.e. reducing the anxiety
of losses) at the expense of a truthful calculation. Likewise, the endowment effect leads to
ignoring the true market value of one’s belonging. Wishful thinking is the most striking
example of self-serving inferences, as its label directly depicts detachment from reality.
In contrast to eristic biases, biases studied by the fast and frugal research program, such as
recognition, take the best, tallying and 1/N (c.f., Gigerenzer, 2008) are biases of heuristics because
of their intendedly rational character. These biases involve ignoring some of the available
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information for efficiency and reduction of noise, while the cognitive motivation remains to be
truth-seeking. For instance, as one of the fast and frugal heuristics, the 1/N heuristic (equally
dividing money into all investment options) is recommended for financial investment decisions.
The 1/N heuristic is biased in ignoring other relevant information as a calculation strategy aiming
at accuracy. By contrast, eristics are biased for their hedonic, non-calculative character. Unlike the
biases of fast and frugal heuristics, the biases of eristics (such as overconfidence bias) are usually
not favorable in terms of the accuracy of entrepreneurial judgements (Barbosa et al., 2019; Zhang
and Cueto, 2017) and in terms of immediate entrepreneurial success in many cases (Hmieleski and
Baron, 2009; Hogarth and Karelaia, 2011). Yet, they can be adaptive anyway if the level of
uncertainty is extreme.
Eristic emotions
When a decision is analyzed, the possible roles of emotions should not be ignored (George and
Dane, 2016). Emotions are products of desires and beliefs (Lazarus, 2006). Since heuristics and
eristic reasoning involve different types of desires and beliefs, the heuristic vs eristic
distinction is also meaningful to classifying emotions. As such, some feelings are heuristic;
others are eristic. Heuristic feelings function as perception tools to make sense of the external
environment and produce cognitive signals to prepare the body for the best response to
environmental conditions. Thereby, heuristic feelings facilitate the sensemaking of the
external environment. By contrast, eristic feelings, such as passionate love or hate, create
compelling emotional attachments that can impede accuracy-seeking. Such eristic feelings
are not about reacting to reality in the present or future. Instead, they are tied to past events
and associations, which create dogmatic faith and closed-mindedness (see Price et al., 2015)
that obscure and reject truthful assessment of reality.
Lazarus (1991, 2006) states that emotions broadly have two functions; appraising and coping.
Appraising is “imputing relational meaning to our ongoing and changing relationships with others
and the physical environment” (Lazarus, 2006, p. 10). “Coping is concerned with our efforts to
manage adaptational demands and the emotions they generate” (Lazarus, 2006, p. 10). Both
heuristic and eristic feelings are for the appraisal and coping; however, they differ in terms of how
they appraise and cope with reality. Heuristic feelings (such as liking, enjoying, fearing and
surprising) are based on open-minded appraisals that are helpful for coping with reality in an
intendedly rational way. As heuristic reasoning is based on “finding ‘good reasons’ to justify a
decision” (Perelman, 1979, p. 32), one can use her intuitive feelings as unconscious recognition of
heuristic information (Simon, 1997). By contrast, eristic feelings (such as loving, hating and
disgusting) give rise to side-taking and dogmatic appraisal of reality.
Eristic feelings are based on hedonically coping with reality through biased assessments
of reality. They create compelling emotional attachments to a person, idea or object. Eristic
feelings are responsible for settling the competition among urges, which is particularly
complicated for an intertemporal choice (i.e. deciding on an option that can change future
options) (Ainslie, 2001). As such, eristic feelings ensure a faithful commitment. For instance,
entrepreneurial passion is a good example of an eristic feeling. Eristic feelings like passion
can be particularly useful to retain optimism (e.g. Lench, 2009) and achieve resilience (e.g.
Hayward et al., 2010; Korber and McNaughton, 2018) even when there is a lack of factual or
logical reason to form a positive evaluation of the present and future reality.
Entrepreneurial passion shapes identities and creates personal attachments to
entrepreneurship activities (Cardon et al., 2009; Lex et al., 2022). Entrepreneurial passion
provides the necessary desire and powerful emotional force to engage in sustained
entrepreneurial activities (Cardon et al., 2009, 2013; Mueller et al., 2017). In this regard,
harmoniously felt entrepreneurial passion (i.e. when the desire is controllable) is an adaptive
motivational factor at any level of uncertainty. When entrepreneurial passion is obsessively
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felt, there is an unyielding urge for entrepreneurship (Fisher et al., 2018) which is also
adaptive if uncertainty is extreme. Passion lets the decision-maker consider and act based on
their desires (Perelman, 1979, 1980) rather than on the reality of one’s environment. At the
most uncertain times in the venturing process, when it is simply not possible to meaningfully
assess reality (much less prospectively assess the reality to come), passion can shift an
entrepreneur’s attention from ambiguous or distracting cues from the environment to cues
from inner urges. In this way, the eristic nature of passion overcomes inaction or
abandonment in the face of intractable environmental uncertainties (and harsh realities).
Eristic feelings are likely to dominate decision-making when there is extreme uncertainty,
as it is adaptive to do so. Empirical research demonstrated that when uncertainty levels
increase, reliance on affectual inputs increases (Faraji-Rad and Pham, 2017). As Lerner et al.
(2015, p. 804) put it, “affect is most likely to influence the judgement in complex and
unanticipated situations”. Yet, eristic feelings represent excessive reliance on affectual inputs
such that they distort intendedly rational decision-making processes, unlike heuristic feelings
which support intended rationality by intuitively processing information from the
environment.
Implications
Implications for research
Given the extreme and pervasive presence of uncertainty in entrepreneurship, the
psychological literature on ecological rationality of decision-making (Artinger et al., 2015;
Gigerenzer and Gaissmaier, 2011; Mousavi and Gigerenzer, 2014) can only partially help
to understand entrepreneurial decision-making (Kurdoglu et al., 2022). For example, how
should entrepreneurial passion be categorized? Neither probabilistic logic nor
simplifying heuristics can effectively accommodate entrepreneurial passion. However,
it is important to understand the role of different emotional influences in entrepreneurial
decisions. The introduction of eristics provides scholars with a new landscape and
framework, which accommodates and situates different forms of emotions (i.e. affectas-information serving calculative heuristic judgments versus emotion serving
attachment or side-taking impeding the search for truth). As such, the perspective
presented in this paper opens a new conceptual path for researchers to explore the
emotional nature of entrepreneurship.
Judgement-based explanations of entrepreneurial action exclusively attend to tools of
intendedly rational decision calculus, including based on the individual’s subjective utility
function. In this regard, Foss and Klein (2012, p. 81) emphasize that “while the exercise of
judgment is a function (or, rather, a set of complementary functions), it is based on perceptions,
skills and heuristics”. Yet, we posit that, at times, entrepreneurs may also resort to eristic
reasoning based on hedonic urges and eristics, particularly when uncertainty is extreme.
Empirical research has shown that it is simply not true that all action requires thoughtful
planning or foresight (Hunt and Lerner, 2018; Wiklund, 2019). How much entrepreneurship
would have never occurred if eristic reasoning had not served to get started and keep going in
the face of insurmountable uncertainty? Further research should empirically establish to
what extent entrepreneurs are inclined to reason eristically when the uncertainty levels
approach extreme levels.
Entrepreneurs usually require financial support from investors who must be persuaded to
elicit their financial support. When making their judgements under high levels of uncertainty,
investors are known to rely on factual data about business viability as well as certain
heuristic cues (Huang, 2018; Huang and Pearce, 2015), such as the enthusiasm of the founder
(Shane et al., 2020) or the displayed optimism and resilience of the founder (Dushnitsky, 2009)
which are indeed not directly related to the quality of the entrepreneurial idea. In a way,
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investors seem to be heuristically searching for entrepreneurs who eristically pursue their
entrepreneurship projects. Researchers can explore this issue alongside exploring the eristics
of investors funding entrepreneurship. For instance, investors are impressed by
entrepreneurs’ influence tactics like inspirational appeal (creating a sense of exciting
opportunity), consultation (asking for suggestions from the evaluator) and collaboration
(offering further help) (Lu et al., 2018). As these factors are not heuristic cues for investors
since they provide negligible information on the future of the entrepreneurial project, they
may be eristic drivers as they please the investors hedonically. The lens of eristic
decision-making can be helpful for researchers to produce further exciting findings.
Implications for practice
The theoretical perspective outlined in this paper offers at least three implications for
practice. First, it legitimizes a particular way of decision-making for nascent entrepreneurs as
it describes how eristic decision-making can be an adaptive option when there is extreme
uncertainty. Many people aspire to be an entrepreneur or make innovations, but they lack the
necessary experience or education. Such people may never realize their entrepreneurial or
innovative dreams if they keep waiting for favorable conditions. The possibilities of eristic
decision-making may seem foolish, so they may never dare entrepreneurial action. Yet, as
March (2006) convincingly puts it, seemingly foolish actions can propel exploration as much
as they can lead to disasters if things go wrong. Yet, identification of the adaptiveness of
eristic decision-making enables would-be entrepreneurs to act and be nascent entrepreneurs,
realizing that eristically made decisions are not as foolish as they may seem once extreme
uncertainty is taken into account. Thus, eristic decision-making can be a liberating option for
people aspiring to be entrepreneurs under highly uncertain circumstances.
Second, recognizing the adaptiveness of eristic decision-making can also be reinvigorating for
venture investors, i.e. angels, crowd funders and private equity investors. Limiting venture
investments to intendedly rational calculations would certainly kill the joy of the investing game.
In a way, play is intrinsically rewarding. As Knight (1941 p. 817) argues, “one would not play any
game if the result could be accurately foreseen”. Thus, barring unethical practices, venture
investors should perhaps deliberately allow themselves more room for eristic reasoning under
extreme uncertainty. Equally important, however, is that venture investors should not
romanticize eristics but rather refrain from using them in favor of smart heuristics and other
decision logics when uncertainty is not extreme.
Third, possibilities of eristic decision-making can be helpful for managing radical
innovation projects. Corporate entrepreneurship and innovation ideas require positive
evaluations of investment decision-makers within organizations. In these evaluations, radical
innovation projects often initially face extreme uncertainty that blurs their option value;
many exciting innovation projects never take off due to the lack of supporting data about
their potential market success (Mueller et al., 2012). Companies should perhaps deliberately
allow for eristic decision-making in these evaluations, granted that their failure would not
threaten the company’s future.
Conclusions
The identification of eristics has important consequences for entrepreneurial decisionmaking under uncertainty. To date, entrepreneurial decision-making scholars largely
focused on decision-making approaches for intendedly rational decision-making. While
heuristics can provide fast and frugal decision-making under moderate uncertainty
(Gigerenzer and Gaissmaier, 2011), their applicability breaks down when uncertainty is
extreme and protracted. In many entrepreneurial decision-making contexts, such as decisions
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regarding radically new venture ideas (e.g. Frederiks et al., 2019), the reality is so nebulous
that instead of using heuristics, one needs to use eristics for decision-making. While
intendedly rational analysis is futile under extreme uncertainty, eristics trigger commitment
to an exploratory action, which can provide surprisingly favorable outcomes for
entrepreneurs. Otherwise, it can be simply useful for learning in case of failure.
Intelligent decision-making requires information and an information processing
capacity (March, 2006). Yet, as emphasized throughout the paper, entrepreneurial
decision-makers sometimes lack any information to use their intelligence while they are
also bounded by cognitive limitations. In these circumstances, they inevitably need to
rely on other psychological and cognitive processes fed by hedonic urges rather than by
information about reality. In a way, just as opportunity recognition is an entrepreneurial
skill (Baron, 2006), ignoring reality at times could also be an entrepreneurial skill
(de Holan, 2014) that is probably fed by eristic reasoning, particularly under extreme
uncertainty. Further research is needed to examine whether entrepreneurs reason and act
differently under different levels of uncertainty. In all respects, studying eristic reasoning
can be a new window for researchers to understand the nature of entrepreneurial
decision-making (cf., Shepherd et al., 2019).
Notes
1. Within organizational scholarship, entrepreneurship scholars have also given considerable attention
to effectuation: a behavioral strategy observed in expert entrepreneurs where they sometimes “take a
set of means as given and focus on selecting between the possible effects than can be created with
that set of means” (Sarasvathy, 2001, p. 245). Effectuation, as a set of heuristic principles and action
strategy, is far richer than simple heuristics. It is a reasoned, intendedly-rational problem-solving
approach (Lerner et al., 2018a).
2. This paper here refers to subjective perceptions of uncertainty rather than objective features of the
environments. As such, uncertainty level of a particular environment can be different for different
people because of their perceptual and cognitive capacities as well as their experiences.
3. Even in relatively stable and clear contexts, heuristics developed in one context may be meaningless
or even counter-productive in other contexts (e.g. heuristics for doing business in New York City vs in
rural China vs in Saudi Arabia vs in prison).
4. We thank the anonymous reviewer for bringing up this issue.
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Corresponding author
Rasim Serdar Kurdoglu can be contacted at: [email protected]
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