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

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.