Analysis of the Strategic Decision-Making Behaviour of Entrepreneurs from a Behavioural Economics Perspective

Abstract

In recent years, behavioural economics has gradually entered the public domain. It attempts to incorporate human behaviour, psychology and cognitive knowledge into economic analysis and theory. Therefore, to a certain extent, behavioural economics also influences entrepreneurs' strategic decisions. In this paper, we will illustrate how behavioural economics can influence the behaviour of entrepreneurs through the reference dependence, endowment effects and mental accounting in behavioural economics theory. The paper also incorporates the case of Taobao to argue that the right decision making behaviour is one of the key factors for the success of a firm. In addition, the paper discusses the reasons behind the strategic decision making behaviour of entrepreneurs through heuristic techniques and prospect theory in behavioural economics. In the conclusion, the paper shows how entrepreneurs can make the right decisions through behavioural economics theory. It also briefly explains the evolution of the direction of economics research and where it is headed in the future.