VALUE OF DECISION MAKING IN A COMPLEX ENVIRONMENT: AN EXPERIMENTAL APPROACH.

Robin M. Hogarth, Spyros Makridakis

    Research output: Contribution to journalArticlepeer-review

    85 Citations (Scopus)

    Abstract

    Are the costs of time and effort spent on analyzing decisions outweighed by benefits? This issue was examined in the context of a competitive business game where human teams were pitted against two kinds of simple-minded arbitrary decision rules: one where rules were applied consistently ( ″arbitrary-consistent″ ); the other where rules were subject to a random component ( ″arbitrary-random″ ). The arbitrary-consistent rules outperformed, on average, 41% of human opponents, the corresponding figure for arbitrary-random being 19%. These results are discussed within the more general context of consistency in decision making which has received considerable attention in both the management and psychological literatures, albeit in the more restricted case of non-competitive and stable environments.

    Original languageEnglish
    Pages (from-to)93-107
    Number of pages15
    JournalManagement Science
    Volume27
    Issue number1
    DOIs
    Publication statusPublished - 1 Jan 1981

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