• describe and explain a set of core theoretical insights from cutting edge psychological research on how humans can to cope with radical uncertainty
• apply such coping strategies (in particular, heuristics) successfully in a given context, in particular, decision-making in the post-Covid economy (in entrepreneurial and corporate settings)

The popularity of books such as “The Black Swan” by Nassim Taleb or “Gut Feelings” by Gerd Gigerenzer indicates the demand for awareness of (psychological) mechanisms to cope with uncertainty and insights into how we can improve them.

Radical uncertainty is different from uncertainty (and complexity in decision-making) per se, as contingencies are often unknowable and robust courses of actions (or even "antifragile" outcomes that benefit from surprises) are preferable to courses of action that appear rational today, but that may be rendered obsolete tomorrow.

This is particularly relevant in 2022! After the Covid restrictions will (hopefully) be over, radical uncertainties will emerge from and in the post-Covid economy. It is yet unclear which companies will survive, or die, or newly emerge and prosper; and how the governments will write down their Covid debts (and what this implies for financial markets and inflation).
Uncertainties in such situations extend beyond “risk” (in the sense of Knight): We cannot know the associated contingencies and even for those that we know, we cannot know probabilities. Rather, we have to cope with radical uncertainty. Thus, we face a situation not described by most research in behavioral economics, which predominantly assumes that contingencies and associated probabilities are knowable.

The unique contribution of this elective is to offer rigorous insights from cutting-edge psychological research (Gigerenzer, Taleb, Tuckett) into successful strategies for coping with radical uncertainty, combined with case-based learning to make the insights vivid.
From a theoretical perspective, this course offers insights into the state-of-the-art of research into the psychology of radical uncertainty. We will cover insights about adaptive rationality (the Gigerenzer research program; how people successfully use heuristics when samples are small, distributions are unknown) and theory-based learning (an emerging research stream in the strategy literature).

These theoretical insights are of particular relevance in entrepreneurial and firm-internal innovation settings.

The above-mentioned theories offer the backbone for a study of concrete cases (some of which will be “real-time” cases, of which the outcome is not known at the time of the elective). Thus, the course contains a significant experiential element where students can learn via cases that may affect their actual decision making in 2022 and 2023. These hands-on experiences will then be reflected through academic literature and in-class case discussion. The final exam combines these theoretical and case elements.
   
 The course will emphasize open discussions and will use a mixture of theory and case studies to engage students in the classroom. To have an optimal mix between theory and practice, 11 lectures of each 2 hours will be accompanied by 9 case presentation sessions of 1 hour each. Topics and readings for each session are published as course outline via Canvas.
  

Ehrig, T., & Schmidt, J. (2021)Theory-based learning and experimentation: How strategists can systematically generate knowledge at the edge between the known and the unknown. Strategic Management Journal (forthcoming).

Gigerenzer, G., & Brighton, H. (2009). Homo heuristicus: Why biased minds make better inferences. Topics in cognitive science, 1(1), 107-143.

Taleb, N. N. (2012). Antifragile: Things that gain from disorder (Vol. 3). Random House Incorporated.