Exploring Novel Representations versus Exploiting Familiar Search Rules: The Role of Cognitive Resources in Solving Novel Problems of Increasing Complexity
Posted: 6 Mar 2017 Last revised: 2 Mar 2020
Date Written: February 28, 2020
Research on problem solving drawing on the Carnegie School suggests that if a problem is of elevated complexity an appropriate representation is key to tackling it. However, when an appropriate representation is not in the decision maker’s knowledge base, it is unclear what determines whether the decision maker searches for novel representations. We theorize that novel representations can be explored only if the search is cognitively affordable. Yet, as problem complexity increases, the search becomes less cognitively affordable. High complexity obstructs the exploration of novel representations and prompts the exploitation of familiar search rules that requires less cognitive resources. Familiar search rules, however, are typically inappropriate for solving a novel problem when complexity is high. We designed and conducted an experiment to test our theory. Participants tackled a multi-period financial decision problem in an environment featuring rare but potentially payoff-devastating random shocks. Our findings corroborate that, as problem complexity increased, fewer participants explored novel representations and more participants exploited familiar search rules. The participants who explored novel representations performed better than those who used familiar search rules. The challenge of problem complexity therefore highlights the exploration of novel representations as an important direction for the research on search processes.
Keywords: Exploration, Representation, Heuristic, Decision Making, Uncertainty, Problem Solving, Procedural Rationality
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