Heisenberg Effects On Business Ideas

Prior research on experimental strategy suggests that choices about "when" and "how" to experiment on a business idea involve comparing an experiment's informativeness and cost. Prior research recognizes that experimenting can also change the value of a business idea—what this paper calls an experiment's Heisenberg effects. The paper shows that incorporating Heisenberg effects in the analysis of "when" to experiment can reverse recommendations derived from the prior literature that focus only on an experiment's informativeness and cost. This paper also shows that actors will almost always find it in their self-interest to consider an experiment's Heisenberg effects in deciding "how" to experiment. More broadly, the paper examines how a business idea's economic potential, an actor's approach to choosing an experimental strategy, and Heisenberg effects interact in determining "when" and "how" actors should experiment.