Abstract for:Impact of Delays and Noise on Strategies and Performance

In an experiment using a realistic simulation of a service firm we investigate how two common features of organizational task environments—delays and noise—impact the strategies adopted and performance outcomes. When multiple viable strategies exist, longer delays bias decision makers towards alternatives that have rapid returns even if they are far from the global optimum. This bias undermines long run performance and also reduces heterogeneity among firms, as most decision makers converge to the inefficient strategy. In contrast, the impact of noise is limited: it only hurts learning when delays are short; otherwise noise has little effect on heterogeneity of strategies and outcomes.