Affordable loss: behavioral economic aspects of the plunge decision | Zendy

Dew Nicholas | Zendy; Sarasathy Saras | Zendy; Read Stuart | Zendy; Wiltbank Robert | Zendy

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Affordable loss: behavioral economic aspects of the plunge decision

Author(s) -

Dew Nicholas,

Sarasathy Saras,

Read Stuart,

Wiltbank Robert

Publication year - 2009

Publication title -

strategic entrepreneurship journal

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 5.061

H-Index - 46

eISSN - 1932-443X

pISSN - 1932-4391

DOI - 10.1002/sej.66

Subject(s) - entrepreneurship , order (exchange) , behavioral economics , economics , heuristic , action (physics) , marketing , public economics , actuarial science , business , microeconomics , finance , computer science , physics , quantum mechanics , artificial intelligence

Affordable loss involves decision makers estimating what they might be able to put at risk and determining what they are willing to lose in order to follow a course of action. Using the entrepreneur's new venture plunge decision, this article combines insights from behavioral economics to develop a detailed analysis of the affordable loss heuristic. Specifically, we develop propositions to explain how individuals: (1) decide what they can afford to lose; and (2) what they are willing to lose in order to plunge into entrepreneurship. The article also discusses the implications of affordable loss for the economics of strategic entrepreneurship. Copyright © 2009 Strategic Management Society.

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