New Bulgarian University >

Center for Cognitive Science >

Summer Schools >

2005 >

Course Description

 

 

Organizational Learning: Theory and Experiments

 

 

 

Massimo Egidi

 

University of Trento

 

Persistency of organisational diversity has received a considerable amount of attention in the recent literature, and the application of some mathematical tools such as Kauffman’s Nk Model and Polya Urns in economic and organisational contexts has permitted new promising results in the attempt to explain it. An interesting progress into this direction has been accomplished when it has been suggested that sources of diversity can be found in learning processes and in connected selection pressures being characterised by path dependency and which may, therefore, give rise to a display of diverse organisational forms. Lock-in phenomena are the cornerstone of this distinction. In some experiments, which we will discuss in the course, different groups, exposed to a different context have been induced to discover different sets of behavioural rules: the discovery has shown high persistency, a sort of "imprinting" which induces different groups to react in very different ways when exposed to the same configuration. This effect explains organisations’ "cognitive inertia" and ambiguity.

Finally, lock-in processes will be explained as biases in individual’s decision-making produced by simplified representations of the decision problem. We will see that individuals make systematic use of default classifications in order to reduce the short-term memory load and the complexity of symbolic manipulation and therefore the rise of biases  in the mental representation of a problem may be the "natural" effect of the categorization and the identification of the building blocks of a strategy. We will see that these findings are coherent with the most recent views expressed by Kanheman and Vernon Smith on bounded, constructivist and ecological rationality.

 

 

Lecture 1. Why organizational learning?  From Optimal Planning to Organizational Learning – An Historical perspective

 

 

Required readings:

 

 

Simon, H. (1991). Bounded rationality and organizational learning. Organization Science, 2(1), 125-134.

 

Egidi  (2001)  The'Creative Destruction' in Economic and Political Institutions  in:  Dallago, Bruno; Mittone, Luigi, eds. Economic institutions, markets and competition:  Centralization and decentralization in the transformation of economic systems. Cheltenham, Elgar, 33-62. [Previously published and downloadable in   IIASA Working Paper  WP 95 124]

 

 

Optional readings:

 

March, J. G., Simon H. A. (1958) Organizations, (1993 2nd edition) New York: John Wiley. (selected chapters)

 

Cyert, R. M., & March, J. G. (1963). A behavioral theory of the firm. Englewood Cliffs, NJ: Prentice Hall.(selected parts)

 

Coase R (1937) “The Nature of the Firm” Economica 4:386-405

 

 

Lecture 2.  Routinized Thinking: Theory and Experimental Evidence

 

 

Required readings:

 

Cohen, M. D. and Bacdayan, P. (1994) "Organizational Routines Are Stored as Procedural Memory: Evidence Form a Laboratory Study”, Organization Science, Vol.5, N.4, pp. 554-568.

 

 Egidi, Massimo ; Narduzzo, Alessandro (1997) The Emergence of Path Dependent Behaviors in Cooperative Contexts in :  International Journal of Industrial Organization; 15(6), October 1997, pages 677-709. Downloads: (external link)  http://www.sciencedi ... c714963ee056f75b6f49
Full text for ScienceDirect subscribers only

Related works:
Working Paper:
The emergence of path-dependent behaviors in cooperative contexts

 

Optional readings:

 

Cyert R. M., Simon  H.A. e Trow D.B. (1956) 'Observation of a business decision', Journal of Business  n. 29,  pp. 237-248.

 

Cohen, M. D. Burkhart, R., Dosi, G. Egidi, M., Marengo, L., Warglien, M., Winter, S. (1996), “Routines and Other Recurring Action Patterns of Organizations: Contemporary Research Issues”, Industrial and Corporate Change, 5 (3), pp. 653-98

This journal article can be ordered from  http://www.oup.co.uk/journals

 

Bonini N., Egidi M., (1999)  "Cognitive Traps in Individual and Organizational Behavior: some empirical evidence". Revue d'economie industrielle, 1999, n. 88, pp. 153-186.

 

Lecture 3. The Landscape of Organizational diversity

 

 

Required readings:

 

Kauffman, S. A. (1989) 'Adaptation on Rugged Fitness Landscapes' in Lectures in the Sciences of Complexity, edited by Stein D. L. Santa Fe Institute Studies in the Sciences of Complexity, Vol. I, pp.527-712. Redwood City, CA: Addison Wesley.

 

Levinthal D.A.(2001) “Modeling Adaptation on Rugged Landscapes” in Lomi A. and Larsen E. R. Dynamic of Organizations ,Cambridge, Mass. MIT Press., pp329-348

 

Frenken, Koen and Marengo, Luigi and Valente, Marco (1999) Interdependencies, nearly-decomposability and adaptation  Unitn Working Paper

 

Optional readings:

 

Kauffman, S. A., Johnsen, S. (1992) 'Co-evolution to the Edge of Chaos: Coupled Fitness Landscapes, Poised States, and Co-Evolutionary Avalanches', in Langton C.G., Taylor L., Farmer J. D. , Rasmussen S.  Artificial Life II,  Redwood City, CA: Addison Wesley.

 

 

Lecture 4. Multiple representations of a problem: experimental evidence

 

 

Required readings:

 

Simon, H. A., & Hayes, J. R. (1976). Understanding process: Problem isomorphs. Cognitive

Psychology, 8, 165–190.

 

Egidi M.(2004) “Decomposition Pattern in Problem Solving” in Social Science Research Network    http://www.ssrn.com/

Downloads: http://econwpa.wustl ... ers/0309/0309003.pdf

 

 http://eprints.biblio.unitn.it/archive/00000543/

 

 

Lecture 5. Biases and Ambiguities; tacit and explicit knowledge.

 

 

Required readings:

 

Kahneman D.(2002) “Maps of Bounded Rationality: a perspective on intuitive judgment and choice” Nobel Prize Lecture, December 8, also in The American Economic Review, 1 December 2003, vol. 93, no. 5, pp. 1449-1475(27)

 

Smith V.L. (2002) “Constructivist and Ecological Rationality in Economics” in Nobel Price Lecture 2002, also in  The American Economic Review, 1 June 2003, vol. 93, no. 3, pp. 465-508(44)

 

Optional readings:

 

Selten R. (1999) What is Bounded Rationality? SBF Discussion Paper B-454

Egidi M. (2005)From Bounded Rationality to Behavioral Economics” forthcoming in Revue Economique