First, one goes backward from ontics to epistemics by asking “What would the data-generating process look like if this idea were really an opportunity?” It’s conceptually similar to a likelihood function–what should the evidence look like if the hypothesis were true?

Second, “opportunities”–untried business ideas that would be profitable–represent a distinct set of “objects” about which we may be able to make scientific statements. The set of true business opportunities may be usefully constrained by thinking about necessary structural conditions for existence. These would include reasons why an opportunity hasn’t been taken already and restrictions on imitation if it initially were profitable. Such statements might enable us to rule out (or severely down-rate the prospects of) some ideas for membership in the set of opportunities.

If improvements in ex ante classification cannot be accomplished in these ways, which depend entirely on the point that business ideas have success or failure built into them regardless of our beliefs, then I don’t see how we can help entrepreneurs.

We probably should have a word like “candidate” to describe the category of apparent dollar bills lying on the ground that would either be “opportunities” or not.

I think the ontological opportunity construct (under whatever name) could be useful for refining judgment, as I said above:

“The opportunity construct could be useful for refining that judgment by developing taxonomies of success scenarios, i.e. different kinds of hypothetical configurations of demand, technology, and institutions that would make investments successful. Such a taxonomy might improve the search process by creating patterns to emulate or seek out. (You also might be able to do the same for mirages and booby traps.)”

Another way to think of it is that many “candidate opportunities” come to us as putative “gaps”or “holes” in what is currently available in the market. (That’s reasonably consistent with the Kirznerian way of looking at things.) One class of such candidates was described in my old “Design Puzzles” post on this blog, but there are also non-design versions of this–what look like unsolved problems paired with unused or newly invented solutions. True opportunities–currently unexploited chances for creating and capturing economic surplus–might have distinct attributes that distinguish or probabilistically indicate them. For example, you would want a coherent account of why they hadn’t already been filled if they really were opportunities.

So when you see one of these candidates, is there any kind of analysis you can do to better forecast whether it really is an opportunity before making sunk investments? If not, then we don’t have much to say about helping entrepreneurs. If yes, which probably only means weeding out the lower tail of mistakes, then the way to do it is by “reverse-engineering” scenarios in which the thing is a real opportunity versus when it is a mirage or a booby-trap to see what observable characteristics each of these is likely to have.

In other words, I think there might be useful patterns, based on the economic requirements for the existence of an opportunity, that could somewhat help to ex ante improve the odds of guessing right (“judging”) investment prospects. That means the opportunity construct would be essential under whatever name one prefers.

See Shane’s Air DaVinci example in the 2012 reflection piece, as a place to begin.