IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v27y1981i1p93-107.html
   My bibliography  Save this article

The Value of Decision Making in a Complex Environment: An Experimental Approach

Author

Listed:
  • Robin M. Hogarth

    (University of Chicago)

  • Spyros Makridakis

    (The European Institute of Business Administration, Fontainebleau, France)

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. Issues raised by the study include the use of automated and controlled baseline strategies to study decision making in complex situations, the need to develop normative guidelines for use in turbulent, competitive environments, and the multidimensional nature of the functions of decision making in organizations.

Suggested Citation

  • Robin M. Hogarth & Spyros Makridakis, 1981. "The Value of Decision Making in a Complex Environment: An Experimental Approach," Management Science, INFORMS, vol. 27(1), pages 93-107, January.
    • Handle: RePEc:inm:ormnsc:v:27:y:1981:i:1:p:93-107
    DOI: 10.1287/mnsc.27.1.93
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.27.1.93
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.27.1.93?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ninko Kostovski & Marjan Bojadjiev & Hari Lokvenec, 2017. "Decision Support Systems For New Project Development In Fast Moving Consumer Goods Industries," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 5, pages 4-14, October.
    2. Rob Kim Marjerison & Jiamin Hu & Hantao Wang, 2022. "The Effect of Time-Limited Promotion on E-Consumers’ Public Self-Consciousness and Purchase Behavior," Sustainability, MDPI, vol. 14(23), pages 1-23, December.
    3. Gerrit H. van Bruggen & Ale Smidts & Berend Wierenga, 1998. "Improving Decision Making by Means of a Marketing Decision Support System," Management Science, INFORMS, vol. 44(5), pages 645-658, May.
    4. Fildes, Robert & Nikolopoulos, Konstantinos, 2006. "Spyros Makridakis: An interview with the International Journal of Forecasting," International Journal of Forecasting, Elsevier, vol. 22(3), pages 625-636.
    5. Yuan Ding & Thomas Jeanjean & Cédric Lesage & Hervé Stolowy, 2009. "An Experiment in the Economic Consequences of Additional Disclosure: The Case of the Fair Value of Unlisted Equity Investments," Post-Print halshs-00458950, HAL.
    6. Thomas Hutzschenreuter & S. Alexander Borchers & Philippa‐Luisa Harhoff, 2021. "Competitors matter: How competitors' actions moderate the influence of firm profitability on the prioritization between growth and efficiency increase," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(2), pages 326-342, March.
    7. van Bruggen, G.H. & Lilien, G.L. & Kacker, M., 2000. "Informants in Organizational Marketing Research," ERIM Report Series Research in Management ERS-2000-32-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    8. Bruce H. Clark & David B. Montgomery, 1998. "Deterrence, Reputations, and Competitive Cognition," Management Science, INFORMS, vol. 44(1), pages 62-82, January.
    9. Sterman, John, 1987. "Misperceptions of feedback in dynamic decisionmaking," Working papers 1899-87., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    10. Fuming Jiang & Subramaniam Ananthram & Jizhong Li, 2018. "Global Mindset and Entry Mode Decisions: Moderating Roles of Managers’ Decision-Making Style and Managerial Experience," Management International Review, Springer, vol. 58(3), pages 413-447, June.
    11. Sterman, John, 1987. "Modeling managerial behavior--misperceptions of feedback in a dynamic decisionmaking experiment," Working papers 1933-87., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    12. Paich, Mark. & Sterman, John., 1992. "Boom, bust and failures to learn in experimental markets," Working papers 3441-92., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    13. Rodgers, Waymond, 1999. "The influences of conflicting information on novices and loan officers' actions," Journal of Economic Psychology, Elsevier, vol. 20(2), pages 123-145, April.
    14. Mark W. Dirsmith & Mark A. Covaleski & John P. Mcallister, 1985. "Of paradigms and metaphors in auditing thought," Contemporary Accounting Research, John Wiley & Sons, vol. 2(1), pages 46-68, September.
    15. O’Dhaniel A Mullette-Gillman & Ruth L F Leong & Yoanna A Kurnianingsih, 2015. "Cognitive Fatigue Destabilizes Economic Decision Making Preferences and Strategies," PLOS ONE, Public Library of Science, vol. 10(7), pages 1-19, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:27:y:1981:i:1:p:93-107. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.