INFORMATION-PROCESSING AND MISPERCEPTIONS OF THE IMPLICATIONS OF FEEDBACK IN DYNAMIC DECISION-MAKING

Two themes have emerged from research on individuals' decision behavior in dynamic tasks. First, dynamic decision-making situations have features that permit effective decision performance by rather simple decision rules. Second, the existence of simple but effective decision rules does not guarantee that decision makers will use those rules. In fact, decision makers exhibit systematically ineffective performance, apparently because they misperceive the implications of feedback structures for their decision making. Other interpretations of such decision behavior are that it is a rational allocation of cognitive effort, that it reflects the incomplete generation of decision rules, and that it results from faulty mental models of the environment. The discussion emphasizes the importance of studying individuals' information-processing behavior in dynamic settings.