Learning-By-Participating in Decision-Making: Broadening Participation, Narrowing Feedback

37 Pages Posted: 22 Dec 2017

See all articles by Henning Piezunka

Henning Piezunka

INSEAD

Vikas A. Aggarwal

INSEAD - Entrepreneurship and Family Enterprise

Hart E. Posen

University of Wisconsin-Madison

Date Written: December 19, 2017

Abstract

A central tenet of work in the Carnegie School tradition is the notion of “learning-by-doing”— organizations learn over time through feedback. In this paper we argue that the learning-by-doing account overlooks the fact that an organization’s decision-making structure is often participatory—i.e., organizational decisions often involve multiple individuals aggregating opinions through a process such as voting. In such contexts, individuals in the organization do not themselves learn-by-doing. Rather, when participating in the decision, they may vote for an alternative that is different from the one eventually selected by the organization. A key consequence of this is that these individual participants do not always receive feedback on their own choices; rather, they receive feedback on the choice made by the organization. We call this “learning-by-participating,” and we seek to understand the implications of this form of learning by comparing it to learning-by-doing, where an individual in the organization (such as the CEO) makes decisions on her own. Using a computational model of decision-making under uncertainty, we find that learning-by-participating leads to distinct patterns of individual learning that create trade-offs at the individual and organizational-levels. For example, while learning-by-participating is beneficial with respect to organization-level performance, it causes a minority of individuals within the organization to hold overly-optimistic views of low-payoff alternatives. We discuss the implications of our findings for research on learning and information aggregation.

Keywords: Learning, Information Aggregation

JEL Classification: M10

Suggested Citation

Piezunka, Henning and Aggarwal, Vikas A. and Posen, Hart E., Learning-By-Participating in Decision-Making: Broadening Participation, Narrowing Feedback (December 19, 2017). Available at SSRN: https://ssrn.com/abstract=3090644 or http://dx.doi.org/10.2139/ssrn.3090644

Henning Piezunka (Contact Author)

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Vikas A. Aggarwal

INSEAD - Entrepreneurship and Family Enterprise ( email )

F-77305 Fontainebleau Cedex
France

Hart E. Posen

University of Wisconsin-Madison ( email )

Madison, WI
United States

HOME PAGE: http://bus.wisc.edu/faculty/hart-posen

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