The Manager's Notepad: Working Memory, Exploration, and Performance

28 Pages Posted: 29 May 2020

See all articles by Daniella Laureiro‐Martinez

Daniella Laureiro‐Martinez

affiliation not provided to SSRN

Stefano Brusoni

ETH Zurich - Department of Management, Technology and Economics

Amulya Tata

affiliation not provided to SSRN

Maurizio Zollo

Bocconi University - Department of Management and Technology

Date Written: December 2019

Abstract

This study builds upon March and Simon’s proposition that individual‐level differences must be considered when explaining decision‐making performance. We extend their discussion on the importance of decision‐makers’ attention to explain heterogeneous patterns of exploration and exploitation within the same uncertain environment. We develop a model of decision‐making under uncertainty in which ‘working memory’ – i.e., the ability to hold multiple elements in mind to actively process them – explains the emergence of heterogeneity in exploration‐exploitation choice patterns. We validated the model in a laboratory study and two replications involving 171 individuals. Our findings show that differences in working memory allow us to identify individuals who are more likely to choose exploration over exploitation appropriately, and thus achieve higher performance. We discuss the implications for management theories, and re‐propose the work of March and Simon as a unifying framework that still can be used to generate and test managerially relevant hypotheses.

Keywords: attention, cognition, e‐greedy, exploitation, exploration, sequence analysis, working memory

Suggested Citation

Laureiro‐Martinez, Daniella and Brusoni, Stefano and Tata, Amulya and Zollo, Maurizio, The Manager's Notepad: Working Memory, Exploration, and Performance (December 2019). Journal of Management Studies, Vol. 56, Issue 8, pp. 1655-1682, 2019, Available at SSRN: https://ssrn.com/abstract=3610269 or http://dx.doi.org/10.1111/joms.12528

Daniella Laureiro‐Martinez (Contact Author)

affiliation not provided to SSRN

No Address Available

Stefano Brusoni

ETH Zurich - Department of Management, Technology and Economics ( email )

Rämistrasse 101
ZUE F7
Zürich, 8092
Switzerland

Amulya Tata

affiliation not provided to SSRN

Maurizio Zollo

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

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