Revisiting the competency trap

Jerker Denrell and Gaël Le Mens

Industrial and Corporate Change, 2020, vol. 29, issue 1, 183-205

Abstract: We revisit the competency trap and reexamine when it occurs. We show that a bias against alternatives that improve with practice does not require that learning is myopic in the sense of lacking foresight or failing to explore. The same bias occurs even if learners engage in substantial exploration and have foresight. In fact, we demonstrate that even a rational and foresighted learner, who follow an optimal strategy for balancing exploration and exploitation, will learn to prefer alternatives with initially high payoffs that decrease with practice over alternatives, with identical expected values, that have initially low payoffs that increase with practice. Our results show that a bias against alternatives that improve with practice is due to an asymmetry in error correction rather than to myopic learning. The implication is that a wide range of selection systems, even optimally designed ones, will be biased against late-bloomers.

JEL-codes: D83 M10 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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