Cognitive biases are frequently associated with entrepreneurs (e.g., Baron, 1998; Busenitz & Barney, 1997; Palich & Bagby, 1995). Yet, current research is not clear on the particular characteristics of cognitive biases and how (and when) these biases impact the opportunity search, discovery, and exploitation process. In this paper, we distinguish different groups of biases by developing a theoretical framework based on well-established behavioral decision-making literature (Kahneman & Tversky, 2000; Yzerbyt, Lories, & Dardenne, 1998). Using this framework, we integrate extant literature related to the entrepreneurial start-up process as it relates to this framework.

From our reading of the literature, a theoretical framework can be built to examine how these cognitive biases and the possible theoretical implications on entrepreneurs can be examined along four dimensions. Specifically, these four dimensions include: (1) Reference to mechanism or effect; (2) Bias on the level of the decision making knowledge vs. meta-cognitive biases; (3) Stability of biases; and (4) Effects of biases on entrepreneurial persistence versus flexibility.