A Theory Based Analysis of Path Dependency

Experiment Description:

The experiment is structured to investigate the likelihood of selecting the sub-optimal path in a path dependent decision under different initial conditions. These conditions include the awareness of path dependency, and its interaction with optimistic and pessimistic awareness of the unknown (unforeseen future states). Participants, selected among managers and divided equally among males and females, will be recruited via Prolific and the experiment will be hosted on the IMSL website (imsl.unibocconi.it). We aim to enroll 1,500 participants.

Procedure:
Participants will begin with a welcome page followed by a baseline survey to collect control variables such as age, gender, education level, field of education, industry, job function, total experience, and managerial experience. Based on their responses to the baseline survey and the education field question, participants will be randomly assigned to one of four groups. The assignment algorithm ensures that only 8 participants join the experiment at any time and maintains a balanced ratio of STEM to Non-STEM participants across the groups.

Experiment Flow:

Introduction Video: All participants watch a video recounting the story of Christopher Latham Sholes and his development of the typewriter, focusing on the period before 1867 and the selection of the QWERTY layout. The video highlights the challenges Sholes faced, particularly the high likelihood of the typewriter jamming.

Scenario Presentation: At the end of the video, participants are asked to put themselves in Sholes' shoes, deciding between three keyboard layouts presented on the next page based on two criteria:

Jamming Resistance (0 to 10): How well the layout prevents jamming.
Typing Speed (0 to 10): How fast typists can type if the typewriter doesn't jam.

The three layouts are:

Layout 1: Scores 10 in jamming resistance but 0 in typing speed.
Layout 2: Balanced with scores of 3 in both criteria.
Layout 3: Scores 0 in jamming resistance but 10 in typing speed.

Group Treatments:
Participants are divided into four groups, each receiving different information at the end of the video and on the following page before the layout selection:

Placebo Group:
Intervention: Participants in this group will be presented with only the essential information from the video recounting the story of Christopher Latham Sholes and his development of the typewriter. They will learn about the challenges Sholes faced, including the high likelihood of the typewriter jamming, but will not receive any additional context regarding path dependency or future uncertainties.
Objective: This group's role is to serve as a control, providing a baseline for comparison with the other groups.

Path Dependency Group:
Intervention: Participants will receive the same initial information as the Placebo Group. Additionally, they will be explicitly informed about the increase in switching cost and the difficulty of the adoption of new keyboard layouts in the future, and how their current decisions might become irreversible.
Objective: To assess the impact of awareness of path dependency on decision-making. We hypothesize that being aware of the increase in switching costs and path dependency results in a lower likelihood of selecting the sub-optimal paths compared to the control group.

Pessimistic Unknown Group:
Intervention: In addition to the path dependency information provided to the Path Dependency Group, participants in this group will be made aware that Sholes recognizes his limited knowledge of future events and is pessimistic about unforeseen developments such as the emergence of major competitors. This intervention aims to highlight the negative potential of .
Objective: To examine how a pessimistic view of future uncertainties affects decision-making in a path-dependent context.
Optimistic Unknown Group:

Intervention: Similar to the Pessimistic Unknown Group, these participants will receive information about path dependency and Sholes' recognition of his limited knowledge of the future. However, they will be informed that Sholes was optimistic about unforeseen future developments, emphasizing the potential positive outcomes of unknown future states.
Objective: To explore how an optimistic perspective on future uncertainties influences decision-making in a path-dependent context.

This setup allows us to examine how different treatments influence the decision-making process and the likelihood of sub-optimal lock-ins.

2024-05-29

2024-05-30

The key outcome is the choice of the layout by participants:
Layout 1: Scores 10 in jamming resistance but 0 in typing speed. (This is assigned a value of 0)
Layout 2: Balanced with scores of 3 in both criteria. (This is assigned a value of 1)
Layout 3: Scores 0 in jamming resistance but 10 in typing speed. (This is assigned a value of 2)

This outcome variable measures the optimality of the selected path, with the first layout which if selected would be a least optimal path in the future being assigned a value of 0, all the way to layout three which if selected would be the most optimal path in the future assigned a value of 2.

Time taken to select a layout

The time each participant takes to select a keyboard layout might be affected by the treatment, which points towards a higher cognitive cost when the participant is made aware of path dependency, and the unknown.

The engagement entails participation in an online experiment on the IMSL website (imsl.unibocconi.it/scenario) distributed through Prolific. Participants will be first introduced to the survey on the first page in two simple sentences, making them aware of the context of the experiment and the end goal which is “the optimal keyboard layout for his Type Writer machine”. They are then asked to fill in a short baseline survey with 8 questions on demographic information. The participants are then asked to watch a short video on the invention of the Type Writer Machine by Christopher Latham Sholes and are then asked to select a keyboard layout based on the available information. Finally, they are thanked for their participation, explicitly debriefed on the experiment, and redirected back to Prolific. This activity is expected to last 5 minutes in total.

The engagement entails participation in an online experiment on the IMSL website (imsl.unibocconi.it/scenario) distributed through Prolific. Participants will be first introduced to the survey on the first page in two simple sentences, making them aware of the context of the experiment and the end goal which is “the optimal keyboard layout for his Type Writer machine”. They are then asked to fill in a short baseline survey with 8 questions on demographic information. The participants are then asked to watch a short video on the invention of the Type Writer Machine by Christopher Latham Sholes and are then asked to select a keyboard layout based on the available information.

There will be 4 arms in the experiment, differing on the information they receive at the end of the video, and before the layout selection.
The control group will receive the essential information needed to make a decision about the layout.
The path dependency group will be made aware of the potential path dependency and the increasing switching costs associated with the choice of layout.
The path dependency-pessimistic unknown will not only be made aware of path dependency, but also they will be made aware of unforeseen contingencies and that Sholes is pessimistic about them.
The path dependency-optimistic unknown will not only be made aware of path dependency, but also they will be made aware of unforeseen contingencies and that Sholes is optimistic about them.

Finally, they are thanked for their participation, explicitly debriefed on the experiment, and redirected back to Prolific. This activity is expected to last 5 minutes in total.

The experimental design is a “treatment within treatment”.
In the first phase of the experiment, we collect information about participants' educational backgrounds and
categorize them into STEM and non-STEM groups. We then create 8 groups based on the intersection of
these two categories (STEM vs. non-STEM) with the four experimental arms. Each participant is assigned to
the group with the lowest number of active and finished participants. This assignment is determined by:
1. The number of participants who have already finished the experiment in that group.
2. The number of participants currently active in the experiment.
If two groups have the same number of active and finished participants, the participant will be assigned to the
group with the fewer finished participants. If both groups also have the same number of finished participants,
the allocation will be done randomly.
To ensure a balanced number of participants in each group and to manage the flow of the experiment, we
limit the number of participants who can enter the experimental platform at the same time to 12. This helps
prevent an imbalance at the end of the experiment caused by participants who start but do not finish the
experiment.

Individual

No

0. We do not use clusters

1500 Managers from the US and the UK, contacted though Prolific, and with equal share of men and women.

We expect roughly 375 participants in each arm

Actual power = 0.8 Effect size d = 0.2