Team Decision-Making and Individual Learning in the Newsvendor Problem: A Laboratory Investigation

Abstract

This laboratory study investigates the impact of the decision-making hierarchy and heterogeneity of knowledge on team performance and on individual performance after the team is dissolved. Our experiment examines effects of both factors. Hierarchical teams perform similarly to individual decision-makers but flat teams outperform both by making fewer extremely poor decisions. Additionally, former members of flat teams make better decisions than former members of hierarchical teams and participants who were not involved in team decision-making. The effects of knowledge heterogeneity are more subtle. While experts do not seem to improve the performance of their teams, their former team members tend to get rid of their old biases more effectively than individuals and former members of homogeneous teams.

Keywords: behavioral operations; knowledge transfer; newsvendor; group learning

JEL Classification: C92, D70, D83