Why do we view managerial thinking (Casual reasoning vs effectual reasoning) in regards to entrepreneurship, and what are the differences between casual and effectual reasoning?

• Usually, when making the pricing decision, marginal revenue is set equal to marginal cost. How do we do the pricing decision for a firm that does not exist? • How do we hire for an organization that does not exist? • How do we value a firm in an industry that did not exist 5 years ago? These are some of the key challenges facing entrepreneurs. However, professor Saras D. Sarasvathy argues we can use casual reasoning or effectual reasoning: 1. Causal reasoning: The owner of the restaurant set a menu and the chef cooks from that. 2. Effectual reasoning: The chef prepares a menu based on ingredients from whatever is at their disposal in the kitchen and cooks’ dinner from that.