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Pertinent to modern industry, administration, finance and society, the most pressing issue for firms today is how to reapproach the way we think and work in business. With topics ranging from improving productivity and coaxing economic growth after periods of market inactivity, Complex Decision-Making in Economy and Finance offers pragmatic solutions for dealing with the critical levels of disorder and chaos that have developed throughout the modern age. This book examines how to design complex products and systems, the benefits of collective intelligence and self-organization, and the best methods for handling risks in problematic environments. It also analyzes crises and how to manage them. This book is of benefit to companies and public bodies with regards to saving assets, reviving fortunes and laying the groundwork for robust, sustainable societal dividends. Examples, case studies, practical hints and guidelines illustrate the topics, particularly in finance.

By employing binary committee choice problems, this paper investigates how varying or eliminating feedback about payoffs affects: (1) subjects’ learning about the underlying relationship between their nominal voting weights and their expected payoffs in weighted voting games; (2) the transfer of acquired learning from one committee choice problem to a similar but different problem. In the experiment, subjects choose to join one of two committees (weighted voting games) and obtain a payoff stochastically determined by a voting theory. We found that: (i) subjects learned to choose the committee that generates a higher expected payoff even without feedback about the payoffs they received; (ii) there was statistically significant evidence of “meaningful learning” (transfer of learning) only for the treatment with no payoff-related feedback. This finding calls for re-thinking existing models of learning to incorporate some type of introspection.

Scholars have examined various aspects of the entrepreneurial mindset, which have provided insights into its attributes, qualities, and operations. However, the different perspectives have led to a diverse array of definitions. With the array of differing definitions, there arises the need to better understand the concept of an entrepreneurial mindset. Therefore, the question remains as to what exactly is the entrepreneurial mindset and how do people tap into it. In examining the literature, we find that three distinct aspects have arisen through the years: the entrepreneurial cognitive aspect—how entrepreneurs use mental models to think; the entrepreneurial behavioral aspect—how entrepreneurs engage or act for opportunities; and the entrepreneurial emotional aspects—what entrepreneurs feel in entrepreneurship. Using those as a basis for our work, we unravel the entrepreneurial mindset by examining deeper into the perspectives and discuss the challenges for implementing it.

We consider the external validity of laboratory measures of risk attitude. Based on a large-scale experiment using a representative panel of the Dutch population, we test if these measures can explain two different types of behavior: (i) behavior in laboratory risky financial decisions, and (ii) behavior in naturally-occurring field behavior under risk (financial, health and employment decisions). We find that measures of risk attitude are related to behavior in laboratory financial decisions and the most complex measures are outperformed by simpler measures. However, measures of risk attitude are not related to risk-taking in the field, calling into question the methods currently used for the purpose of measuring actual risk preferences. We conclude that while the external validity of measures of risk attitude holds in closely related frameworks, this validity is compromised in more remote settings.

The realm of entrepreneurship has seen a rise in research on effectuation from the perspective of cognition, which has sparked significant discussion among academics due to a lack of well-defined theoretical foundations. However, despite this interest in cognitive theories, the grounded cognition theory has not been adequately explored to explain the behavior of entrepreneurs. Accordingly, we propose an integrative theoretical framework for the effectuation and causation models in light of an offloading process. This process helps to explain the relationship between the entrepreneur’s cognitive antecedents and their behavioral outcomes. Consequently, our study provides theoretical underpinnings for effectuation and a better understanding of how effectuation and causation models are alternatingly engaged during the entrepreneur’s decision-making process.Plain English SummaryThe entrepreneur’s behavior explained by the grounded cognition theory: how and why effectuation and causation are complementary models of decision-making? This research draws on grounded cognition theory and aims to deepen our understanding of the entrepreneurial decision-making process through the notion of “offloading.” It also discusses its behavioral consequences according to effectuation and causation models. This research theoretically explains the basis for effectuation and suggests an integrative framework for the entrepreneurial decision-making process, which is critically needed in the current body of research. By understanding the complementary nature of the two models, entrepreneurs can gain a better understanding of their own decision-making process and improve their overall practices. This research therefore strengthens entrepreneurs’ awareness of the point at which they switch from one process to another, thereby legitimizing their decision-making process, by improving representation of the entrepreneurial decision-making process. This research therefore helps us understand the business practices of entrepreneurs.

This study develops and tests a model of the relationship between a learning-oriented organizational climate, employee individual resilience and three broad categories of proactive behaviors, i.e. proactive work behavior, proactive strategic behavior and proactive person–environment fit behavior. The study tests a mediation model. Cross-sectional data was gathered from 108 employees in four Dutch organizations. Results demonstrate that employee resilience mediates the relationships between a learning-oriented organizational climate and proactive work behaviors. By investigating three proactive behaviors, this study answers to the call for studies that empirically investigate multiple related proactive behaviors within one study design. This design sheds light on whether a learning-oriented organizational climate promotes certain proactive behaviors more than others.

Understanding the psychological nature and development of the individual entrepreneur is at the core of contemporary entrepreneurship research. Since the individual functions as a totality of his or her single characteristics (involving the interplay of biological, psychosocial, and context-related levels), a person-oriented approach focusing on intraindividual dynamics seems to be particularly fruitful to infer realistic implications for practice such as entrepreneurship education and promotion. Applying a person-oriented perspective, this paper integrates existing psychological approaches to entrepreneurship and presents a new, person-oriented model of entrepreneurship, the Entrepreneurial Personality System (EPS). In the empirical part, this model guided us to bridge two separate research streams dealing with entrepreneurial personality: research on broad traits like the Big Five and research on specific traits like risk-taking, self-efficacy, and internal locus of control. We examine a gravity effect of broad traits, as assumed in the EPS framework, by analyzing large personality data sets from three countries. The results reveal a consistent gravity effect of an intraindividual entrepreneurial Big Five profile on the more malleable psychological factors. Implications for entrepreneurship research and practice are discussed.

Recent work in economics has rediscovered the importance of belief-based utility for understanding human behaviour. Belief ‘choice’ is subject to an important constraint, however: people can only bring themselves to believe things for which they can find rationalizations. When preferences for similar beliefs are widespread, this constraint generates rationalization markets, social structures in which agents compete to produce rationalizations in exchange for money and social rewards. I explore the nature of such markets, I draw on political media to illustrate their characteristics and behaviour, and I highlight their implications for understanding motivated cognition and misinformation.

The importance and centrality of the construct of agency is wellknown amongst social scientists. Yet, there is still little agreement on how this construct should be understood and defined, as demonstrated by the diversity of instruments that are used to investigate it. Indeed, there is no current consensus or standardized methodology to assess agency. This paper provides a synthetic overview of the studies that have evaluated and measured individuals' agency. More specifically, the purpose is to review research that quantitatively investigates the agency of adults, as well as children and youth, across different social contexts. In the process, it offers recommendations to inform future research, practice, and policy. We identified published peer-reviewed studies relating to the assessment of agency across countries and across age through a narrative literature review. The findings were grouped according to whether agency was measured in its most comprehensive conception or in a precise single domain or dimension, which was then discussed separately for children, adults, and women. Of the 3879 studies identified from online searches of the literature and the five additional sources gathered through bibliography mining, 106 qualified for full review, with 34 studies included in the final synthesis. Multiple different instruments were found to be currently adopted or developed to assess agency. The present review offers an exhaustive overview of the different conceptualizations of agency and of the available instruments to assess it, providing critical information for researchers and policymakers to improve intervention and empowerment programs.

In this paper, we provide an explanation for why risk taking is related to optimism. Using a laboratory experiment, we show that the degree of optimism predicts whether people tend to focus on the positive or negative outcomes of risky decisions. While optimists tend to focus on the good outcomes, pessimists focus on the bad outcomes of risk. The tendency to focus on good or bad outcomes of risk in turn affects both the self-reported willingness to take risk and actual risk taking behavior. This suggests that dispositional optimism may affect risk taking mainly by shifting attention to specific outcomes rather than causing misperception of probabilities. In a second study we find evidence that dispositional optimism is related to elicited parameters of rank dependent utility theory suggesting that focusing may be among the psychological determinants of decision weights. Finally, we corroborate our findings with process data related to focusing showing that optimists tend to remember more and attend more to good outcomes and this in turn affects their risk taking.