Learning in Dynamic Decision Making: Information Utilization andFuture Planning

It has been proposed that decision makers often misperceive the feedback provided by dynamically complex environments, and some have questioned whether people are capable of learning effective decision-making in such environments. Indeed, some (e.g., Sterman,1989) researchers believe that humans simply do not possess the “cognitive machinery” that allow them to deal with dynamic situations. In two experiments, we studied learning behavior in a well-known dynamic environment called the beer game. Contrary to previous findings, we found that performance significantly improved through repeated practice. In the first experiment, concurrent verbal reports indicated that performance improved through better utilization of critical information. Subjects also learned to engage in better future planning by anticipating changes in the system. In the second experiment, we provided only information that was critical for their decisions and found that initial performance was significantly better, indicating faster learning. It is concluded poor utilization of critical information and insufficient future planning are the major factors for learning in dynamic decision making.