Question
3.1 Foundations of opportunity recognition and
evaluation (cont.)
3.1.2 The role of cognitive biases and heuristics in opportunity evaluation
• Entrepreneurs tend to show systematic cognitive biases and overestimate their chances of success
• Cognitive biases: Common types of mental shortcuts used to make judgements about opportunities and the
business
• Entrepreneurs who believe that they can predict how well the business will do, and perceive a low probability of
failure, are likely to view a new idea as an opportunity that is feasible and worth considering
• Heuristics: Simplifying the conditions individuals use to make decisions, particularly in uncertain and complex
conditions
• Entrepreneurs use heuristics more extensively in their decision-making than managers in large organisations
• Heuristics or shortcuts can be efficient because they aid judgements without high information-processing costs
• The biases of overconfidence, planning fallacy, belief in the law of small numbers, and an illusion of control directly
influence risk perception and the decision to start a business venture
paraphrase in short and simple english
evaluation (cont.)
3.1.2 The role of cognitive biases and heuristics in opportunity evaluation
• Entrepreneurs tend to show systematic cognitive biases and overestimate their chances of success
• Cognitive biases: Common types of mental shortcuts used to make judgements about opportunities and the
business
• Entrepreneurs who believe that they can predict how well the business will do, and perceive a low probability of
failure, are likely to view a new idea as an opportunity that is feasible and worth considering
• Heuristics: Simplifying the conditions individuals use to make decisions, particularly in uncertain and complex
conditions
• Entrepreneurs use heuristics more extensively in their decision-making than managers in large organisations
• Heuristics or shortcuts can be efficient because they aid judgements without high information-processing costs
• The biases of overconfidence, planning fallacy, belief in the law of small numbers, and an illusion of control directly
influence risk perception and the decision to start a business venture
paraphrase in short and simple english
Answers
GPT-4o mini
**Foundations of Opportunity Recognition and Evaluation**
3.1.2 **Cognitive Biases and Heuristics in Opportunity Evaluation**
- Entrepreneurs often have biases that lead them to overestimate their chances of success.
- **Cognitive biases** are common mental shortcuts used to judge business opportunities.
- Entrepreneurs who think they can predict success and see little chance of failure are more likely to view new ideas as feasible opportunities.
- **Heuristics** are simple rules that help people make decisions in uncertain situations.
- Entrepreneurs tend to rely on heuristics more than managers in larger companies.
- Using heuristics can be helpful because it allows quick judgments without needing extensive information.
- Specific biases, like overconfidence, the planning fallacy, belief in small samples, and the illusion of control, can affect how entrepreneurs perceive risks and their decisions to start a business.
3.1.2 **Cognitive Biases and Heuristics in Opportunity Evaluation**
- Entrepreneurs often have biases that lead them to overestimate their chances of success.
- **Cognitive biases** are common mental shortcuts used to judge business opportunities.
- Entrepreneurs who think they can predict success and see little chance of failure are more likely to view new ideas as feasible opportunities.
- **Heuristics** are simple rules that help people make decisions in uncertain situations.
- Entrepreneurs tend to rely on heuristics more than managers in larger companies.
- Using heuristics can be helpful because it allows quick judgments without needing extensive information.
- Specific biases, like overconfidence, the planning fallacy, belief in small samples, and the illusion of control, can affect how entrepreneurs perceive risks and their decisions to start a business.