BIAS IN BUSINESS AS A BEHAVIORAL REACTION TO ECONOMIC UNCERTAINTY

Abstract

This research is dedicated to "bias in business," which is particularly relevant since the level of bias in managerial decision-making increases with uncertainty. The Ukrainian economy and its entrepreneurial sector are currently experiencing a heightened level of uncertainty. The research aims to refine the concepts of "bias" and "bias in business," justify an approach to the classification of biases, and analyze some of the biases currently exhibited by Ukrainian businesses. As a result of the research based on the fundamental principles of "behavioral economics" theory, the term "bias" has been refined, and a classification of biases has been conducted according to three criteria. It was found that, based on sociological surveys of Ukrainian entrepreneurs conducted in 2003 and 2004, there is evidence of bias in the formation of expectations of the entrepreneurial community regarding output and labor hiring. Several possible directions for reducing the level of bias in entrepreneurial decision-making have been identified. The article employs research methods such as comparing economic theories—specifically "behavioral economics" and "rational expectations theory," classification using various criteria, generalization of sociological research results, and visualization. The research presented in this article is theoretically significant in that it developed the conceptual framework of "behavioral economics" theory, while its practical significance is in the generalizations that can be used to substantiate modified algorithms of interaction between the Ukrainian government and Ukrainian businesses, considering the high ("extraordinary") level of economic and societal uncertainty.