The effect of thinking style on dynamic systems performance: The mediating role of stock-flow understanding

Rosa Hendijani

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2021, vol. 95, issue C

Abstract: Dynamism is an important characteristic of many systems, including those of an economic nature. These systems include stocks (i.e., accumulations) and flows (i.e., inflows and outflows) that change the stock's level. Previous studies show that rational thinking positively influences decision making and performance in dynamic systems. This paper reports on two studies designed to examine whether rational thinking improves performance in dynamic systems both directly and indirectly through stock-flow understanding. An inventory management task known as the near-beer game measures dynamic systems performance. The first study uses two standard gauges of rational thinking: the Cognitive Reflection Test (CRT) and Rational-Experiential Inventory (REI-40). The results of this study support the hypothesis that rational thinking has a significant positive direct effect on performance, as well as a significant indirect effect through stock-flow understanding. The second study uses a one-factor experimental design with three levels for thinking mode manipulation, including rational thinking, intuitive thinking, and control conditions. The results support only an indirect effect in which rational thinking improves stock-flow understanding and, in turn, dynamic systems performance. Taken together, the two studies indicate that rational thinking in chronic and situational forms improves stock-flow understanding and performance in dynamic systems.

Keywords: Dynamic systems; Stock-flow understanding; Rational thinking style; Rational-experiential thinking style; Cognitive reflection test (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:95:y:2021:i:c:s221480432100118x

DOI: 10.1016/j.socec.2021.101778

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