VCs' decision processes: Evidence suggesting more experience may not always be better

Journal of Business Venturing

Volumn 18, Issue 3, 2003, Pages 381-401

  Shepherd, Dean A ^a   Zacharakis, Andrew ^b   Baron, Robert A ^c  

^a UNIVERSITY OF COLORADO   (United States)

^b BABSON COLLEGE   (United States)

^c RENSSELAER POLYTECHNIC INSTITUTE   (United States)

Author keywords

Bootstrapping models; Decision making; Experience; Process measures of expertise; Venture capital

Indexed keywords

EID: 0037991534     PISSN: 08839026     EISSN: None     Source Type: Journal    
DOI: 10.1016/S0883-9026(02)00099-X     Document Type: Article

References (79)

1. Abell D.F. Hammond J. Strategic Market Planning: Problems and Analytical Approaches 1979 Prentice-Hall Englewood Cliffs, NJ
2. Anderson J.R. A spreading activation theory of memory J. Verbal Learn. Verbal Behav. 22 1983 261-295
3. Arkes H.R. Christensen C. Lai C. Blumer C. Two methods of reducing overconfidence Org. Behav. Human Decis. Process. 39 1987 133-144
4. Ashton R.H. Research in audit decision making: rationale, evidence, and implications Res. Monogr. vol. 6 1983 Canadian Certified General Accountants' Research Foundation Vancouver, Canada
5. Ashton A.H. Does consensus imply accuracy in accounting studies of decision making? Account. Rev. 60 1985 173-185
6. Australian Department of Industry, Science and Technology Australian Development Capital Directory 1995 Australian Government Publishing Service Canberra
7. Baron R.A. Cognitive mechanisms in entrepreneurship: why and when entrepreneurs think differently than other persons J. Bus. Venturing 13 1998 275-294
8. Baron R.A. Counterfactual thinking and venture formation: the potential effects of thinking about "what might have been" J. Bus. Venturing 15 2000 79-92
9. Bedard J. Chi M. Graham L. Shanteau J. Expertise in auditing Auditing 12 1993 21-56 Suppl.
10. Besanko D. Dranove D. Shanley M. Economics of Strategy 1996 Wiley New York, NY
11. Biggadike R.E. The risky business of diversification Harvard Bus. Rev. 57 (3) 1979 103-111
12. Brehmer A. Brehmer B. What have we learned about human judgment from thirty years of policy capturing? In: Brehmer B. Joyce C.R.B. Advances in Psychology 54: Human Judgment, the SJT View 1988 75-114 Elsevier Sci. Publish. Amsterdam
13. Brown T.R. A comparison of judgmental policy equations obtained from human judges under natural and contrived conditions Math. Biosci. 15 1972 205-230
14. Bonner S. Experience effects in auditing: the role of task-specific knowledge Account. Rev. 65 1990 72-92
15. Camerer, C.F., 1981a. The validity and utility of expert judgment. Unpublished doctoral dissertation, University of Chicago.
16. Camerer C.F. General conditions for the success of bootstrapping models Organ. Behav. Hum. Perform. 27 1981 411-422
17. Camerer C.F. Johnson E.J. The process-performance paradox in expert judgment: how can experts know so much and predict so badly? In: Anders Ericsson K. Smith J. Toward a General Theory of Expertise: Prospects and Limits 1991 195-217 Cambridge Univ. Press New York
18. Chaput de Saintonge D.M. Hathaway H.R. Antibiotic use in otitis media: patient simulations as an aid to audit BMJ 283 1981 883-884
19. Chase W. Simon H. Perception in chess Cogn. Psychol. 4 1973 55-81
20. Chi M.T.H. Koeske R. Network representation of a child's dinosaur knowledge Dev. Psychol. 19 1983 29-39
21. Choo F. Trotman K.T. The relationship between knowledge structure and judgments for experienced and inexperienced auditors Account. Rev. 66 1991 464-485
22. Davis J.T. Experience and auditors' selection of relevant information for preliminary control risk assessments Auditing 15 (1) 1996 16-37
23. Dawes R.M. A case study of graduate admissions: application of three principles of human decision making Am. Psychol. 26 1971 180-188
24. DeCastro J.O. Chrisman J.J. Order of market entry, competitive strategy and financial performance J. Bus. Res. 33 1995 165-177
25. Dreyfus H.L. Dreyfus S.E. Mind Over Machine 1986 Free Press New York
26. Eagly A.H. Chakien S. Attitude structure and function Lindsey G.T. Fiske S.T. Gilbert D.T. Handbook of Social Psychology 4th ed. 1998 269-322 Oxford Univ. Press and McGraw-Hill New York
27. Ebert R.J. Kruse T.E. Bootstrapping the security analyst J. Appl. Psychol. 63 1978 110-119
28. Einhorn H. Expert judgment: some necessary conditions and an example J. Appl. Psychol. 59 1974 562-571
29. Einhorn H. Expert judgment: some necessary conditions and an example In: Arkes H.R. Hammond K.R. Judgment and Decision Making: An Interdisciplinary Reader 1986 480-491 Cambridge Univ. Press New York
30. Fischhoff B. For those Condemned to Study the Past: Heuristics and Biases in Hindsight, Judgment Under Uncertainty: Heuristics and Biases 1982 Cambridge Univ. Press Cambridge, UK
31. Fischhoff B. MacGregor D. Subjective confidence in forecasts J. Forecast. 1 1982 155-172
32. Fiske S.S. Taylor S.E. Social Cognition 1991 McGraw-Hill New York
33. Frederick D.M. Auditors' representation and retrieval of internal control knowledge Account. Rev. 66 1991 240-258
34. Frederick D.M. Libby R. Expertise and auditors' judgments of conjunctive events J. Acc. Res. 24 1986 270-290
35. Gobbo C. Chi M.T.H. How knowledge is structured and used by expert and novice children Cogn. Dev. 1 1986 221-237
36. Golder P.N. Tellis G.J. Pioneer advantage: marketing logic or marketing legend? J. Mark. Res. 30 (2) 1993 158-170
37. Green R. Srinivasan V. Conjoint analysis in marketing: new developments and directions J. Mark. 54 (4) 1990 3-19
38. Hahn, G. and Shapiro, S. 1966. A catalogue and computer program for the design and analysis of orthogonal symmetric and asymmetric fractional factorial designs. Report No. 66-C-165. Schenectady, NY: General Electric.
39. Hitt M.A. Middlemist R.D. A methodology to develop the criteria and criteria weightings for assessing subunit effectiveness in organizations Strateg. Manage. J. 18 1979 159-167
40. Hitt M.A. Dacin M.T. Levitas E. Arregle J. Borza A. Partner selection in emerging and developed market contexts: resource-based and organizational learning perspectives Acad. Manage. J. 43 (3) 2000 449-467
41. Khan A.M. Assessing venture capital investments with noncompensatory behavioral decision models J. Bus. Venturing 2 1987 193-205
42. Libby R. Lewis B.L. Human information processing research in accounting: the state of the art in 1982 Account. Organ. Soc. 7 1982 231-285
43. Logan G.D. Repetition priming and automaticity: common and underlying mechanisms? Cogn. Psychol. 22 1990 1-35
44. Louviere J.J. Analyzing Decision Making: Metric Conjoint Analysis 1988 Sage Publications Newbury Park, CA
45. MacMillan I.C. Zemann L. Subba Narasimha P.N. Criteria distinguishing unsuccessful ventures in the venture screening process J. Bus. Venturing 2 1987 123-137
46. Mahajan J. The overconfidence effect in marketing management predictions J. Mark. Res. 29 1992 329-342
47. McDougall P.P. Covin J.G. Robinson R.B. Herron L. The effects of industry growth and strategic breadth on new venture performance and strategy content Strateg. Manage. J. 15 1994 537-554
48. Muzyka D. Birley S. Leleux B. Trade-offs in the investment decisions of European VCs J. Bus. Venturing 11 1996 273-287
49. Neuberg S.L. The goal of forming accurate impressions during social interaction: attenuating the impact of negative expectancies J. Pers. Soc. Psychol. 56 1989 374-386
50. Nosofsky R. Choice, similarity, and the context theory of classification J. Exp. Psychol. Learn. Mem. Cogn. 10 1 1984 104-114
51. Nosofsky R. Attention, similarity, and the identification-categorization relationship J. Exp. Psychol. Gen. 115 (1) 1986 39-57
52. Nosofsky R. Attention and learning processes in the identification and categorization of integral stimuli J. Exp. Psychol. Learn. Mem. Cogn. 13 (1) 1987 87-108
53. Osherson D. Shafir E. Krantz D.H. Smith E.E. Probability bootstrapping: improving prediction by fitting extensional models to knowledgeable but incoherent probability judgments Org. Behav. Human Decis. Process. 69 1997 1-8
54. Oskamp S. Overconfidence in case-study judgments (Eds.) Kahneman D. Slovic P. Tversky A. Judgment Under Uncertainty: Heuristics and Biases 1982 287-293 Cambridge Univ. Press Cambridge
55. Petty R.E. Cacioppo J.T. Strathman A.J. Priester J.R. To think or not to think: exploring two routes to persuasion (Eds.) In: Shavitt S. Brock T.C. Persuasion 1994 113-117 Allyn and Bacon Boston
56. Pollitecon Publications Australian Venture Capital Guide 1996 Pollitecon Publications Australia
57. Priem R.L. Executive judgment, organizational congruence, and firm performance Organ. Sci. 5 1994 421-437
58. Riquelme H. Rickards T. Hybrid conjoint analysis: an estimation probe in new venture decisions J. Bus. Venturing 7 1992 505-518
59. Roese N.J. Counterfactual thinking Psychol. Bull. 121 1997 133-148
60. Roose J.E. Doherty M.E. Judgment theory applied to the selection of life-insurance salesmen Org. Behav. Human Decis. Process. 16 1976-231
61. Russo J.E. Schoemaker P.J.H. Managing overconfidence Sloan Manage. Rev. 1992 7-17 Winter
62. Schmalensee R. Product differentiation advantages of pioneering brands Am. Econ. Rev. 72 1982 349-365
63. Shanteau J. Psychological characteristics and strategies of expert decision-makers Acta Psychol. 68 1988 203-215
64. Shanteau J. Competence in experts: the role of task characteristics Org. Behav. Human Decis. Process. 53 1992 252-266
65. Shepherd D.A. VCs' assessment of new venture survival Manage. Sci. 45 (5) 1999 621-632
66. Shepherd D.A. Zacharakis A.L. Conjoint analysis: a window of opportunity for entrepreneurship research (Eds.) Katz J. Advances in Entrepreneurship, Firm Emergence and Growth (Volume III) 1997 203-248 JAI Press Greenwich, CT
67. Shepherd D.A. Zacharakis A. VCs' expertise: a call for research into decision aids and cognitive feedback J. Bus. Venturing 17 2002 1-20
68. Shepherd D.A. Ettenson R. Crouch A. New venture strategy and profitability: a VC's assessment J. Bus. Venturing 15 2000 449-467
69. Spence M.T. Brucks M. The moderating effects of problem characteristics on experts' and novices' judgments J. Mark. Res. 34 1997 233-247
70. Stewart T.R. Judgment analysis: procedures In: Brehmer B. Joyce C.R.B. Human Judgement: The SJT View 1988 41-74 Elsevier Publisher North Holland
71. Timmons J.A. New Venture Creation: Entrepreneurship for the 21st Century 4th ed. 1994 Irwin Boston
72. Tversky A. Kahneman D. Judgments under uncertainty: heuristics and biases Science 185 1974 1124-1131
73. Ullman D.G. Doherty M.E. Two determinants of the diagnosis of hyperactivity: the child and the clinician Adv. Dev. Behav. Pediatr. 5 1984 167-219
74. Weber R. Some characteristics of free recall of computer controls by EDP auditors J. Acc. Res. 18 1980 214-241
75. Williamson O.E. The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting 1985 Free Press New York
76. Yip G.S. Barriers to Entry 1982 Lexington Books Lexington, MA
77. Zacharakis A.L. Meyer G.D. A lack of insight: do VCs really understand their own decision process? J. Bus. Venturing 13 (1) 1998 57-76
78. Zacharakis A.L. Meyer G.D. The potential of actuarial decision models: can they improve the venture capital investment decision? J. Bus. Venturing 13 (1) 2000 57-76
79. Zacharakis A.L. Shepherd D.A. The nature of information and VCs' overconfidence J. Bus. Venturing 14 (6 ) 2001 311-332