Rahmandad, H., Repenning, N. & Sterman, J. (2009). Effects of Feedback Delay on Learning. System Dynamics Review. 25(4), 309-338.

DOI: http://doi.org/10.1002/sdr.427

Abstract

Understanding barriers to learning is central to understanding firm performance. This paper investigates the role of time delays between taking an action and observing the results in impeding learning. These delays, ubiquitous in real-world settings, can introduce important tradeoffs between long-term and short-term performance. Here we build four learning heuristics, with different levels of complexity and rationality, and analyze their performance in a simple resource allocation task. All four reliably converge to the optimal solution when there are no short delays, and when those delays are correctly assessed by the decision-maker. However, learning is slowed significantly when decision-makers err in assessing the length of delay. In many cases, the decision-maker finds optimal solution wandering in the action space or converging to a suboptimal allocation. Simulation analysis shows errors in estimates of delays can impede learnin significantly regardless of the organization's level of rationality. The proposed heuristics can be applied to a range of problems for modeling learning from experience in presence delays.

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