On Risk and Time Pressure: When to Think and When to Do

TL;DR

This paper models how agents allocate effort between risky initial ideas and exploring alternatives under time constraints, explaining phenomena like false starts and the impact of timing on success probability.

Contribution

It introduces a dynamic effort allocation model that captures the tradeoff between risk and time, explaining when agents revisit initial ideas and how timing affects outcomes.

Findings

Agents may revisit initial ideas after exploring alternatives.

Delaying exploration reduces overall success probability.

The model explains false starts in problem-solving.

Abstract

We study the tradeoff between fundamental risk and time. A time-constrained agent has to solve a problem. She dynamically allocates effort between implementing a risky initial idea and exploring alternatives. Discovering an alternative implies progress that has to be converted to a solution. As time runs out, the chances of converting it in time shrink. We show that the agent may return to the initial idea after having left it in the past to explore alternatives. Our model helps explain so-called false starts. To finish fast, the agent delays exploring alternatives reducing the overall success probability.