Cognitive Antecedents of Family Business Bias in Investment Decisions: A Commentary on \u27\u27Risky Decisions and the Family Firm Bias: An Experimental Study based on Prospect Theory\u27\u27

Lude and Prügl explored \u27\u27family business bias,\u27\u27 a cognitive tendency where the family nature of a firm can often reduce investors\u27 perceived risk in investments. As a result, investors would display lower risk-avoidance in the gain domain and reinforced risk-seeking in the loss domain. We expanded the authors\u27 work by introducing four cognitive factors (anchoring, representativeness, stereotype heuristic, and information availability) that can explain the underlying mechanisms behind the prevalence of \u27\u27family business bias\u27\u27 and other cognitive misperceptions surrounding family businesses when it comes to investment decisions