Information: the more, the better?
Good decisions depend on information. OK. But are we aware of the trade-offs we make during this process?
Two possibilities:
- make decisions in a hurry, without proper data/evidence;
- take too long, collecting information that is not necessarily relevant
Several behavioral studies indicate that people in leadership /executive positions tend to suffer from the second: they continue gathering information, even when the one available would be sufficient for a good decision.
But why?
A recent study from October-2021 conducted by Marc Rieger, Mei Wang & Daniel Hausmann explored some reasons that usually come up. In general, we:
- underestimate the cost of seeking information
- are superoptimistic, considering the new information will be correct
- are risk averse to make early decisions
- are curious to know more
- make systematic mistakes when considering the information we already have
By testing each of those hypotheses in a series of experiments (see the paper for more details), the authors observed that the main reason why we continue collecting is a systematic bias when estimating gains from this additional information.
People — especially when in leadership or strategic positions, where the impact of choices extends to multiple spheres — think they will have a stronger decision-making basis considering more data. However, in reality those gains are only marginal. Eventually, the result is even opposite, when the extra information has low validity or contradicts itself.
What then?
The conclusion is that, in most cases, we should not postpone a decision. If we keep in mind that we often overestimate the positive impact of new information, we will be able to avoid the costs — psychological, emotional, and time-related — created by further searches.
There are other contexts, though, in which this collection extends: agenda conflicts between the parties involved, accountability issues, among other reasons.
References
Dos Santos, Tiago Rodrigo. (2022). Choice overload: and excess of information and doubts.
Rieger, Marc Oliver. (2021). Why do we pay too much for information?
Rieger, Marc Oliver; Wang, Mei; Hausmann, Daniel. (2021). Pre-decisional information acquisition: Why do we pay too much for information? Journal of Economic Psychology, Vol. 86, October.
