Search on Rugged Landscapes: An Experimental Study
40 Pages Posted: 20 Nov 2010 Last revised: 7 May 2013
Date Written: February 27, 2013
Abstract
This paper presents findings from a laboratory experiment on human decision-making in a complex combinatorial task. We draw on the canonical NK model to depict tasks with varying complexity and find strong evidence for a behavioral model of adaptive search. Success narrows down search to the neighborhood of the status quo, while failure promotes gradually more explorative search. Task complexity does not have a direct effect on behavior, but systematically affects the feedback conditions that guide success-induced exploitation and failure-induced exploration. The analysis also shows that human participants were prone to over-exploration, since they broke off the search for local improvements too early. We derive stylized decision rules that generate the search behavior observed in the experiment and discuss the implications of our findings for individual decision-making and organizational search.
Keywords: Search, complexity, bounded rationality, decision-making, experiment, NK model
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
The Coevolution of Technology and Organization in the Transition to the Factory System
-
The Dual Role of Modularity: Innovation and Imitation
By Sendil K. Ethiraj, Daniel Levinthal, ...
-
Hoping for A to Z While Rewarding Only A: Complex Organizations and Multiple Goals
-
Standards, Modularity, and Innovation: The Case of Medical Practice
-
The Maintenance of Professional Authority: The Case of Physicians and Hospitals in the United States
-
The Embeddedness of Technological Systems
By Raghu Garud