DYNAMIC DECISION-MAKING UNDER UNCERTAINTY - AN EXPERIMENTAL-STUDY OF THE DYNAMIC COMPETITIVE FIRM

This paper reports On an experimental investigation into how well huma n subjects are able to tackle a reasonably complicated dynamic decisio n problem under risk. Subjects performed the experiment twice (a few d ays apart). It was found that subjects performed better (though not pe rfectly) on the second repetition, and that the improvement was select ive: subjects clearly found some aspects of the dynamic solution easie r to approach than others. The experiment confirms that some subjects are better decision-makers than others and that different parts of the problem are easier than others. It also suggests how actual behaviour might be modelled.