Knowledge versus experience in financial problem solving performance

Abstract

The present study examined the solution quality and information processing patterns of experts, novices, and "trained novices" as they solved a series of six complex retirement investment problems. The goal of the investigation was to better understand how prior problem solving experience and knowledge of the task influenced individuals' cognitive efforts. As expected, expert financial planners produced higher quality solutions than did novices. However, trained novices (individuals who attended a six hour educational intervention) were found to produce solutions that were twice as good as those generated by experts. A variety of analyses were conducted that focused on both the types of information individuals selected to solve the problems, and the efficiency with which they processed task information, in an effort to explain group differences in solution quality. Findings are discussed in terms of the potential benefits of offering cognitively engineered educational training programs in order to improve task-specific problem solving competency.

Solutions offerings: a critical review and reconceptualisation

“…The broader literature distinguishes between ‗well-defined' and ‗ill-defined' problems (Mayer and Wittrock, 1996) or ‗well-structured' from ‗ill-structured' (Jonassen, 2000). Problems that are well defined or structured contain a description of all the relevant elements and may be solved by the application of a limited number of regular and structured rules and principles identified in the broader literature, such as means-ends analysis, ‗working backward' and ‗analogical reasoning' (Hershey and Walsh, 2000). The solutions are comprehensible to the problem solver, with clear connections between the nature of a problem and the decision choices available.…”

Leader cognition in real-world settings: How do leaders think about crises?

“…Information gathering will be influenced by the interpretation applied by leaders to understand the change event. Thus information gathering will be influenced by the descriptive mental models that might be applied to understand the change event (Weick, 1995) with cues obtained through both external and internal scanning serving, along with information being gathered, to activate relevant descriptive mental models (Hershey et al, 1990;Hershey & Walsh, 2001).…”

Leader cognition: Improving leader performance through causal analysis

“…and used fewer yet more informative variables than untrained novices. Hershey and Walsh (2001) also found, however, that their trained novices performed even better than their experts, suggesting that improvement of a participant's mental model through the providing of a conceptual model of the problem led to increased performance.…”

“…In fact, some evidence of this can be found in Hershey and Walsh's (2001) study of financial planning performance. Hershey and Walsh (2001) contrasted untrained novices, trained novices, and experts with regard to their understanding of a complex retirement planning problem.…”

“…Hershey and Walsh (2001) contrasted untrained novices, trained novices, and experts with regard to their understanding of a complex retirement planning problem. Training of novices consisted of providing a basic understanding of financial planning for retirement, along with introducing a conceptual model that dealt specifically with the central problem used in the study.…”