Unsticking the rationality stalemate: Motivated reasoning, reality, and irrationality

• Published in: Journal of Business Venturing Insights Vol. 18; p. e00336
• Main Authors: Kurdoglu, Rasim Serdar, Lerner, Daniel, Ates, Nufer Yasin
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01.11.2022
• Subjects: Business venturing; Entrepreneurial action theory; Entrepreneurial decision-making; Irrationality; Uncertainty; Business venturing; Uncertainty; Irrationality; Entrepreneurial action theory; Entrepreneurial decision-making
• ISSN: 2352-6734; 2352-6734
• DOI: 10.1016/j.jbvi.2022.e00336

Rationality is an elusive and increasingly debated concept in entrepreneurship research. We offer a novel conceptualization of rationality based on reasoning motivations. We posit that logical, probabilistic, and heuristic reasoning logics are motivationally rational because the decision-maker attempts to accurately perceive the external world and problem-solve (even if rapidly and approximately). By contrast, when the reasoning ignores an assessment of reality and accuracy in problem-solving and instead is deluded by psychological (e.g., hedonic) urges that prompt self-serving inferences, we categorize such decisions as motivationally irrational. We develop a theoretical account for how motivational irrationality is adaptive under extreme uncertainty as it enables entrepreneurs to dare action when even heuristic reasoning is inconclusive or entirely ineffective. •Rationality is an elusive and increasingly debated concept in entrepreneurship.•Venturing is subject to extreme uncertainty where heuristics are ineffective.•Motivational irrationality allows entrepreneurial action under extreme uncertainty.•Investors and capitalists should leave room for entrepreneurs' irrationality.