Modeling managerial search behavior based on Simon’s concept of satisficing

Abstract

Computational models of managerial search often build on backward-looking search based on hill-climbing algorithms. Regardless of its prevalence, there is some evidence that this family of algorithms does not universally represent managers’ search behavior. Against this background, the paper proposes an alternative algorithm that captures key elements of Simon’s concept of satisficing which received considerable support in behavioral experiments. The paper contrasts the satisficing-based algorithm to two variants of hill-climbing search in an agent-based model of a simple decision-making organization. The model builds on the framework of NK fitness landscapes which allows controlling for the complexity of the decision problem to be solved. The results suggest that the model’s behavior may remarkably differ depending on whether satisficing or hill-climbing serves as an algorithmic representation for decision-makers’ search. Moreover, with the satisficing algorithm, results indicate oscillating aspiration levels, even to the negative, and intense—and potentially destabilizing—search activities when intra-organizational complexity increases. Findings may shed some new light on prior computational models of decision-making in organizations and point to avenues for future research.

Social Identity and Organizational Control: Results of an Agent-Based Simulation

“…These algorithms have recently been criticized for not appropriately reflecting managerial behaviour (Billinger et al 2014;Puranam et al 2015;Tracy et al 2017). Therefore, the model employs an algorithm (Wall 2021) that captures key elements of so-called satisficing 1 behaviour -initially described by Simon (1955Simon ( , 1959 -which can build on considerable empirical evidence (Parker et al 2007;Güth 2010;Caplin et al 2011;Johnson et al 2012;Misuraca & Fasolo 2018). Among the key elements of satisficing behaviour is that agents search until they find a satisfying alternative and adapt the aspiration level to the difficulty of their task.…”

“…First, the principal organizational setting and managerial decision-making are outlined briefly (paragraphs 2.8 to 2.23). For more extensive descriptions of the hierarchical organizations, the reader can refer to Wall (2016Wall ( , 2017Wall ( , 2021. Subsequently, the model's description focuses on managers' social identity which is described in paragraphs 2.24 to 2.44.…”

“…As argued above (see paragraph 2.4), managers perform search and decision-making processes in the spirit of satisficing with the algorithmic representation following Wall (2021). A core idea of satisficing is that decisionmakers discover and evaluate new options sequentially: the agent discovers one novel option ⃗ d r t and evaluates whether it is satisfactory.…”

Incomplete incentive contracts in complex task environments: an agent-based simulation with minimal intelligence agents

“…For capturing the managers' search behavior, the model employs a satisficing algorithm (Wall 2021a) in the spirit of Simon (1955Simon ( , 1959. Satisficing means a process of sequential search for options until a satisfactory level of utility is achieved.…”

“…Managers perform search and decision-making processes in the spirit of Simon's satisficing (Simon 1955) with the algorithmic representation following Wall (2021a).…”