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Abstract
This paper employs a system dynamics-based framework to examine the limitations of experiential learning as a guide for decision-making in organizations. This framework departs from the more traditional approach to modelling experiential learning processes in organizations by emphasizing the systematic interaction between decision-making agents and their environments, rather than the effects of varying degrees of noise on performance. We present the results of a series of computer simulations that examined the consequences of adaptive learning in organizations by concentrating explicitly on the link between individual decisions and the system-level consequences generated by the interaction of individual choices. The results show that experience is a poor basis for learning primarily because the understanding of structural relations between individual actions and their aggregate consequences is confounded by nonlinear dynamics, time delays, and misperception of feedback.
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