The Effects of Interfirm Mobility and Individual versus Group Decision Making on Managerial Time Horizons

Abstract

We conducted an experimental simulation to examine the impact of inter-firm mobility and individual versus group decision making on managerial time horizons. Subjects played the role of firm members in a market consisting of several firms between which there existed the possibility of mobility. Within each firm, over several rounds of play, subjects decided how much to withdraw from a limited fund. Funds not withdrawn received a positive expected return. We manipulated two variables: the rate of interfirm mobility and whether firm decision makers consisted of groups of five or of individual decision makers. Both factors significantly influenced withdrawals. High interfirm mobility led to high rates of withdrawal. In addition, individual decision makers withdrew more money than groups.