Exploration of Outcome Feedback for Dynamic Decision Making

Abstract

Public policy-making can be well approached as human decision-making behavior striving to manage complex dynamic tasks. Particularly, various governmental programs require public officials make decisions on a regular basis with the next decisions depending on the outcome of previous decisions. The result of these previous decisions is termed "outcome feedback" in the literature. This dissertation proposes alternative designs of outcome feedback and hypothesizes that they help decision-makers manage dynamic decision tasks more effectively. A process model describing how the relevant components of dynamic decision-making behavior--task difficulty, information display, task knowledge and task performance--interact with one another is also theoretically proposed and empirically examined. Three treatment groups are designed to empirically test the hypotheses in a gaming experiment built on a generic production-distribution task. The first is a group of subjects who receive knowledge of results--the actual results of their own decisions--alone. The subjects in the second treatment additionally receive continuous data on the performance of a strong competitor--benchmark outcome. The subjects in the last group have access to full-featured outcome feedback--knowledge of results, benchmark outcome, and benchmark decisions perceived as the strong competitor`s decisions.The empirical evidence supports the hypothesis that providing benchmark outcome improves task performance. Analyses of the process model show that the improvement comes from improving the anchoring an adjustment heuristics the subjects used. The results also reveal surprising finding that providing the full-featured outcome feedback actually degrades task performance. The proposed process model that the subjects` attention to the benchmark player`s decisions damages their capabilities to acquire task knowledge captured by the anchoring and adjustment heuristics. Another path of the unexpected negative effect of the addition of benchmark decisions on task performance goes through decision makers` reduction of time allocation on viewing game boards (an indicator of information use) and hence impair their heuristics knowledge measured by the post-game debriefing questions. The hypothesized process model generally provides an effective description of dynamic decision-making behavior. The findings contribute to how decision support may be designed to aid decision-making in complex dynamic systems in general and public policy-making in particular.