Search on Rugged Landscapes: An Experimental Study

Stephan Billinger (), Nils Stieglitz () and Terry R. Schumacher ()
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Stephan Billinger: Strategic Organization Design Unit, Department of Marketing and Management, University of Southern Denmark, DK-5230 Odense M, Denmark
Nils Stieglitz: Management Department, Frankfurt School of Finance and Management, 60314 Frankfurt am Main, Germany
Terry R. Schumacher: Department of Engineering Management, Rose-Hulman Institute of Technology, Terre Haute, Indiana 47803

Organization Science, 2014, vol. 25, issue 1, 93-108

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, whereas failure promotes gradually more exploratory 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 overexploration, 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 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (27)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:25:y:2014:i:1:p:93-108

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