The Aggregation-Learning Trade-off

Organizational decision-making that leverages the collective wisdom and knowledge of multiple individuals is ubiquitous in management practice, occurring in settings such as top management teams, corporate boards, and the teams and groups that pervade modern organizations. Decision-making structures employed by organizations shape the effectiveness of knowledge aggregation. The authors argue that decision-making structures play a second crucial role in that they shape the learning of individuals that participate in organizational decision-making. In organizational decision making, individuals do not engage in learning-by-doing, but rather, in what we call learning-by-participating, which is distinct in that individuals learn by receiving feedback not on their own choices, but rather on the choice made by the organization. The authors examine how learning-by-participating influences the efficacy of aggregation and learning across alternative decision-making structures and group sizes. Their central insight is that learning-by-participating leads to an aggregation-learning tradeoff in which structures that are effective in aggregating information can be ineffective in fostering individual learning. They discuss implications for research on organizations in the areas of learning, microfoundations, teams, and crowds.