Understanding Microeconomics through Cognitive Science: Making a Case for Early Entrepreneurial Decisions

This work deals with decision theory and microeconomics in light of developments in the field of cognitive science that provides rich scope for addressing issues at the core of standard economics. Therefore, drawing upon the interdisciplinary nature of cognitive science, this work describes and motivates the functional analysis of the decision-making that firms or entrepreneurs execute when their business idea takes shape. More specifically, we propose a theoretical and methodological framework along with an analytical formulation that preliminarily explains the area in which the entrepreneur acts as a cognitive agent making some initial decisions. Even if it has not been completely modelled yet, this preliminary formulation is aimed at bringing many aspects of the entrepreneur’s mindset into the sphere of a cognitive approach to microeconomics. What distinguishes this work from the standard economics approach to decision theory is both the structure and the content of the cognitive agent’s decision pattern. By using functional analysis, we attempt to provide entry-level assessments to search for the relative maximum – or the relative minimum – of the entrepreneur’s objective function who is about to embark upon a new business initiative as well as to develop an already existing one.