Dysfunctional learning in decision processes: the case of employee reciprocity

Abstract

While traditional economic models characterize individuals as boundlessly self‐interested, decades of empirical findings suggest that individuals' self‐interest motives are constrained by concurrent preferences for fairness. Individuals act on these preferences by behaving reciprocally: rewarding others perceived as behaving fairly and punishing others perceived as behaving unfairly. Successful firms must learn to navigate environments characterized by the reciprocity of their transaction partners. This paper investigates firms' judgments about employee reciprocity and posits a dysfunctional learning process whereby firms that overestimate employee reciprocity learn to correct their beliefs through feedback, while those that underestimate employee reciprocity do not. The result, demonstrated through computer simulation, is a systematic bias toward an overemphasis on employee self‐interest, and a resulting inefficiency in wage choices that hurts firm profitability. Copyright © 2011 John Wiley & Sons, Ltd.

The quest for expansive intellectual property rights and the failure to disclose known relevant prior art

“…By probing the behavior of individual inventors and legal counsel, the fine‐grained analysis we adopt continued where theirs left off. Our work is also in line with the recent efforts of strategy scholars that employ insights from psychology to explore micro‐level phenomena with substantial strategic implications for firm performance (e.g., Larkin, Pierce, and Gino, ; Markle, ).…”

Leaders' impression management during organizational decline: The roles of publicity, image concerns, and incentive compensation

“…Management simulation games are a very useful method of studying leaders' decision making (Finkelstein & Hambrick, 1996), and have been used successfully in previous studies (e.g., Markle, 2011;Quigley, Tesluk, Locke, & Bartol, 2007). The primary value of an experimental design is its internal validity.…”

Gratitude versus Entitlement: A Dual Process Model of the Profitability Implications of Customer Prioritization

“…We included one moderator from each of these three categories in our study, with our choice determined by the moderator's level of relevance in a prioritization context. Informational cues differ in their diagnosticity (Markle 2011) such that some cues are useful for evaluating how to respond to certain benefits, whereas others are not (Jayachandran, Kalaignanam, and Eilert 2013). Furthermore, perceived locus of control over the benefit being provided is an important determinant of a cue's diagnosticity (Palmatier et al 2007).…”