IDEAS home Printed from https://ideas.repec.org/a/gam/jgames/v6y2015i3p251-261d54380.html
   My bibliography  Save this article

Unfazed by Both the Bull and Bear: Strategic Exploration in Dynamic Environments

Author

Listed:
  • Peter S. Riefer

    (Department of Experimental Psychology, University College London, 26 Bedford Way, London WC1H 0AP, UK)

  • Bradley C. Love

    (Department of Experimental Psychology, University College London, 26 Bedford Way, London WC1H 0AP, UK)

Abstract

People in a changing environment must decide between exploiting options they currently favor and exploring alternative options that provide additional information about the state of the environment. For example, drivers must decide between purchasing gas at their currently favored station ( i.e. , exploit) or risk a fruitless trip to another station to evaluate whether the price has been lowered since the last visit. Previous laboratory studies on exploratory choice have found that people choose strategically and explore alternative options when it is more likely that the relative value of competing options has changed. Our study extends this work by considering how global trends (which affect all options equally) influence exploratory choice. For example, during an economic crisis, global gas prices may increase or decrease at all stations, yet consumers should still explore strategically to find the best option. Our research question is whether people can maintain effective exploration strategies in the presence of global trends that are irrelevant in that they do not affect the relative value of choice options. We find that people explore effectively irrespective of global trends.

Suggested Citation

  • Peter S. Riefer & Bradley C. Love, 2015. "Unfazed by Both the Bull and Bear: Strategic Exploration in Dynamic Environments," Games, MDPI, vol. 6(3), pages 1-11, August.
    • Handle: RePEc:gam:jgames:v:6:y:2015:i:3:p:251-261:d:54380
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2073-4336/6/3/251/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2073-4336/6/3/251/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Wagner A. Kamakura & Rex Yuxing Du, 2012. "How Economic Contractions and Expansions Affect Expenditure Patterns," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 39(2), pages 229-247.
    2. Betsch, Tilmann & Haberstroh, Susanne & Glockner, Andreas & Haar, Thomas & Fiedler, Klaus, 2001. "The Effects of Routine Strength on Adaptation and Information Search in Recurrent Decision Making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 84(1), pages 23-53, January.
    3. Thomas Dudey & Peter Todd, 2001. "Making Good Decisions with Minimal Information: Simultaneous and Sequential Choice," Journal of Bioeconomics, Springer, vol. 3(2), pages 195-215, May.
    4. Vinod Sharma & Jayant Sonwalkar, 2013. "Does Consumer Buying Behavior Change During Economic Crisis?," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 33-48.
    5. James G. March, 1991. "Exploration and Exploitation in Organizational Learning," Organization Science, INFORMS, vol. 2(1), pages 71-87, February.
    6. Nathaniel D. Daw & John P. O'Doherty & Peter Dayan & Ben Seymour & Raymond J. Dolan, 2006. "Cortical substrates for exploratory decisions in humans," Nature, Nature, vol. 441(7095), pages 876-879, June.
    7. Katona, George, 1974. "Psychology and Consumer Economics," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 1(1), pages 1-8, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christina Fang & Daniel Levinthal, 2009. "Near-Term Liability of Exploitation: Exploration and Exploitation in Multistage Problems," Organization Science, INFORMS, vol. 20(3), pages 538-551, June.
    2. Oded Berger-Tal & Jonathan Nathan & Ehud Meron & David Saltz, 2014. "The Exploration-Exploitation Dilemma: A Multidisciplinary Framework," PLOS ONE, Public Library of Science, vol. 9(4), pages 1-8, April.
    3. Jensen, Are & Clausen, Tommy H., 2017. "Origins and emergence of exploration and exploitation capabilities in new technology-based firms," Technological Forecasting and Social Change, Elsevier, vol. 120(C), pages 163-175.
    4. Phanish Puranam & Murali Swamy, 2016. "How Initial Representations Shape Coupled Learning Processes," Organization Science, INFORMS, vol. 27(2), pages 323-335, April.
    5. Daniella Laureiro-Martinez, 2014. "Cognitive Control Capabilities, Routinization Propensity, and Decision-Making Performance," Organization Science, INFORMS, vol. 25(4), pages 1111-1133, August.
    6. Guo, Jingjing & Guo, Bin & Zhou, Jianghua & Wu, Xiaobo, 2020. "How does the ambidexterity of technological learning routine affect firm innovation performance within industrial clusters? The moderating effects of knowledge attributes," Technological Forecasting and Social Change, Elsevier, vol. 155(C).
    7. Michelle Rogan & Marie Louise Mors, 2014. "A Network Perspective on Individual-Level Ambidexterity in Organizations," Organization Science, INFORMS, vol. 25(6), pages 1860-1877, December.
    8. Nazanin Mohammadi Sepahvand & Elisabeth Stöttinger & James Danckert & Britt Anderson, 2014. "Sequential Decisions: A Computational Comparison of Observational and Reinforcement Accounts," PLOS ONE, Public Library of Science, vol. 9(4), pages 1-8, April.
    9. De Gennaro Aquino, Luca & Sornette, Didier & Strub, Moris S., 2023. "Portfolio selection with exploration of new investment assets," European Journal of Operational Research, Elsevier, vol. 310(2), pages 773-792.
    10. Alina Ferecatu & Arnaud De Bruyn, 2022. "Understanding Managers’ Trade-Offs Between Exploration and Exploitation," Marketing Science, INFORMS, vol. 41(1), pages 139-165, January.
    11. Arman Avadikyan & Gilles Lambert & Christophe Lerch, 2016. "A Multi-Level Perspective on Ambidexterity: The Case of a Synchrotron Research Facility," Working Papers of BETA 2016-44, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    12. Henri A. Schildt & Markku V.J. Maula & Thomas Keil, 2005. "Explorative and Exploitative Learning from External Corporate Ventures," Entrepreneurship Theory and Practice, , vol. 29(4), pages 493-515, July.
    13. Giuliani, Elisa & Martinelli, Arianna & Rabellotti, Roberta, 2016. "Is Co-Invention Expediting Technological Catch Up? A Study of Collaboration between Emerging Country Firms and EU Inventors," World Development, Elsevier, vol. 77(C), pages 192-205.
    14. Insoo Cho & Peter F. Orazem, 2021. "How endogenous risk preferences and sample selection affect analysis of firm survival," Small Business Economics, Springer, vol. 56(4), pages 1309-1332, April.
    15. Tomasz Helbin & Amy Van Looy, 2021. "Is Business Process Management (BPM) Ready for Ambidexterity? Conceptualization, Implementation Guidelines and Research Agenda," Sustainability, MDPI, vol. 13(4), pages 1-25, February.
    16. Son K. Lam & Thomas E. DeCarlo & Ashish Sharma, 2019. "Salesperson ambidexterity in customer engagement: do customer base characteristics matter?," Journal of the Academy of Marketing Science, Springer, vol. 47(4), pages 659-680, July.
    17. Jonathan H. Reed, 2022. "Operational and strategic change during temporary turbulence: evidence from the COVID-19 pandemic," Operations Management Research, Springer, vol. 15(1), pages 589-608, June.
    18. Alan Hevner & Isabelle Comyn-Wattiau & Jacky Akoka & Nicolas Prat, 2018. "A pragmatic approach for identifying and managing design science research goals and evaluation criteria," Post-Print hal-02283783, HAL.
    19. Felipe A. Csaszar & Nicolaj Siggelkow, 2010. "How Much to Copy? Determinants of Effective Imitation Breadth," Organization Science, INFORMS, vol. 21(3), pages 661-676, June.
    20. Bruneel, Johan & Clarysse, Bart & Bobelyn, Annelies & Wright, Mike, 2020. "Liquidity events and VC-backed academic spin-offs: The role of search alliances," Research Policy, Elsevier, vol. 49(10).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jgames:v:6:y:2015:i:3:p:251-261:d:54380. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.