[HN Gopher] Persist or let it go: a study of entrepreneurial dec...
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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)
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(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.
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