The question of why individuals choose to explore or exploit as their learning accumulates remains largely unexplored in organizational literature in a strictly causal sense. To bridge this gap, we conducted an experimental laboratory study of individual decision-making sequences using a real-effort task that involved a training phase and an active phase. In the training phase, the participants used their skills to solve the same task in eight rounds to simulate the development of individual-level learning. In the active phase, we observed sequential choices over exploring or exploiting. The participants were financially incentivized to abandon a familiar task (that they learned in the training phase) by providing higher performance-related payoffs for exploring novel task environments. Interestingly, we not only found that different kinds of performance feedback affected the exploration-exploitation choice, but that the feedback-choice linkage is contingent upon the initial conditions of the task environment in terms of its simplicity or complexity. We found that when individuals are initially exposed to simpler tasks, they are more likely to continue exploiting a familiar task; and when they are initially exposed to more complex tasks, they are more likely to explore new and more profitable tasks and then continue exploiting the new tasks they learned. These findings contribute to the literature on individual search by demonstrating the important role of initial conditions and path dependence in exploration and exploitation behavior.

Prominent research in strategic imitation, exploration, exploitation, and organizational learning identifies imitation as a less costly alternative to experimentation. Yet, its role in the exploration–exploitation dilemma remains underexplored in the literature. This study employs an agent-based model to examine how two distinct agent types—those who imitate and those who experiment—interact and influence each other. The model incorporates the concept of “satisficing” derived from the behavioral theory of the firm, along with insights from research on imitative heuristics. The findings reveal that overcrowding affects both agent types negatively. Imitators suffer from diminished performance due to intensified competition, which increases as more imitators join the system. Meanwhile, explorers are hindered in their attempts at radical innovation due to the presence of other explorers and clusters of imitators. This paper contributes to the field as the first to model individual agents as ‘satisficers’ within a competitive exploration–exploitation framework. By incorporating imitation, it provides novel insights into the dynamics of organizational learning and strategic decision-making.

Legitimacy may result from support for projects that a government implements. However, legitimacy may also result from the opportunity to participate in the selection process of projects. We tested the strength of these competing sources of legitimacy experimentally and their relationship. We find a straightforward effect of the former: the more projects a participant supports, the higher their taxes. Participants are also willing to pay for participation; if they have had a say, they pay higher taxes. Yet, most of this effect is actually instrumental: participants want participation to ensure that their taxes are used for purposes they deem acceptable. 

This research examines the determinants of project success on crowdfunding platforms within a competitive context. We focus on the specific horizontal attributes of the project- attributes that do not affect the project returns but over which investors may have heterogeneous preferences-and on the project returns' risk level. We run a laboratory experiment with several set-ups, where multiple projects compete for funding simultaneously and where potential investors operate in a quasi-continuous time. We find the horizontal attributes' information affects project selection, while the risk level of the project returns affects the amount of collected funding.

The question of why individuals choose to explore or exploit as their routines accumulate remains largely unexplored in the organizational literature in a strict causal sense. To bridge this gap, we conducted an experimental laboratory study of individual decision-making sequences using a real-effort task and a two-phase procedure involving a training phase and an active phase. The former involved a learning process in which participants used their own skills to solve the same task across eight rounds to simulate the development of individual-level routines. In the active phase, we observed sequential choices to exploit an established routine, explore a new routine, or exploit a new routine. Participants were financially incentivized to abandon an established routine by providing higher performance-related payoffs for exploring unknown task environments. Our findings show that initial conditions related to task environment complexity matter; we found that when individuals are initially exposed to simpler tasks, they were more likely to continue exploiting an established routine. When initially exposed to more complex tasks, they were more likely to explore new and more profitable tasks, and then to continue exploiting the new routines they learned. Interestingly, we find not only that different kinds of performance feedback lead the exploration-exploitation choice, but our results also show how the feedback-choice linkage is contingent upon the task environment, i.e. the context (simple or complex) in which initial routines are formed. These findings contribute to the literature on individual search by demonstrating the important role of routinization and initial conditions in exploration and exploitation behavior.

In this paper, we propose a novel laboratory experiment that examines the role of individuals’ self-perceived creativity and risk preferences in their willingness to innovate. In our experimental setting subjects are involved in two main activities: performing a real-effort task for multiple rounds and deciding on whether to try to obtain an innovation in the real-effort task. The decision to innovate has been designed as a matter of solving a creative task or playing a lottery. If the subjects were successful in solving the creative task or winning the lottery, they obtained a simplified version of the real-effort task, which is to say that they successfully implemented an innovation. We also elicited the subjects’ risk attitudes and their self-perceived creativity. We found that risk-taking attitudes were positively correlated with the willingness to innovate only when the outcome of the decision to innovate was determined by the lottery. On the other hand, there was no significant effect of either self-perceived creativity or risk-taking attitudes on the willingness to innovate when the innovation outcome was the result of solving a creative task. However, self-perceived creativity was positively correlated with the likelihood of solving the creative task successfully. Our results also showed that the performance in the real-effort task was influenced by how the decision to innovate was framed. Our study not only provides more insights into how to foster the decision to innovate at the individual level but also contributes to the use of experimental methods in the innovation literature.

Most people pay their taxes most of the time, even if the expected disutility from enforcement is too low to deter tax evasion. One potential reason is tax morale and, more specifically, rule following. In a lab experiment, we show that the willingness to pay taxes just because participants are told they are supposed to pay is indeed pronounced. Yet compliance is reduced if participants learn that income is heterogeneous. The effect is driven by participants with the lowest income. The reduction obtains irrespective of the tax regime. If the tax is proportional to income, or progressive, participants become more skeptical about the willingness of participants with high income to comply.