Temporal Myopia in Strategic Search

Abstract

In this paper, we explore the little studied phenomena of temporal myopia, i.e., an organization’s constraints taking into account time-varying performance implications of strategic choices made. In particular, we investigate, using a NK simulation, how different decision-making patterns, i.e., temporally myopic, temporally hypermetropic (farsighted), and bifocal/rational decision making, promote or hinder the effective discovery of high performing strategies. Our results suggest that counter to common wisdom, the bifocal/rational decision maker, who takes into account all temporal performance consequences of her choices, does not necessarily find the highest performing strategies. Instead, we find that the hypermetropic decision maker, who disregards the short-term, can outperform any other type when there is no uncertainty. Surprisingly, we also find that even temporally myopic decision making can outperform other types under outcome uncertainty and risk-aversion. Our findings have important implications for the contingencies of organizations’ ability to economize on information related to the strategic choices they face. Further, we speak to the literature on myopic search and bounded rationality.