The Impact of Entrepreneurial Cognitive Biases and Stakeholder Competing Goals on Experimental Strategy Choices

Prior work in business experimentation concludes that involving other stakeholders besides the entrepreneur mitigates the challenge of biased experimental decision-making. However, this work also maintains a key simplifying assumption—that the actors involved have a common goal to maximize profits—despite a vast literature showing that actors have competing goals that go beyond pure profit maximization. Competing goals represent a first-order challenge to business experimentation. This paper shows that while involving stakeholders in experimental decision-making may sometimes improve experimental outcomes by reducing actor bias, this remedy comes at a cost—the potential for new errors resulting from conflicting goals between actors. This implies that entrepreneurs will accept the input of other stakeholders in experimental decision-making when the costs of goal alignment are small relative to the benefits of reducing bias. More broadly, this paper suggests that all actors must take competing goals into account when considering when to experiment, how to experiment, and what to do next given the results of an experiment.