[acb-hsp] Why Too Much Data Disables Decision-Making

Mon Aug 27 15:18:52 EDT 2012

Peter,
I truly believe there are times when we experience information overload and
our decision making can become distorted because of it.
Thanks for sharing.
Kenneth Semien, Sr.
----- Original Message ----- 
From: "peter altschul" <paltschul at centurytel.net>
To: "Acbhsp" <acb-hsp at acb.org>
Sent: Monday, August 27, 2012 12:48 AM
Subject: [acb-hsp] Why Too Much Data Disables Decision-Making

Why Too Much Data Disables Your Decision Making
  By Ron Friedman August 24, 2012
  Best known for killing cats, curiosity can also slay your
judgment.
  Quick, think back to a major decision.  You know, the kind that
compelled you to read everything on a topic and lead you to spend
hours devouring every last scrap of data.  How'd that work out
for you?
  We like to think that more information drives smarter
decisions; that the more details we absorb, the better off we'll
be.  It's why we subscribe to Google Alerts, cling to our iPhone,
and fire up our TweetDeck.
  Knowledge, we're told, is power.  But what if our thirst for
data is actually holding us back? What if obsessing over
information actually reduces the quality of our decisions?
  That's the question raised by Princeton and Stanford University
psychologists in a fascinating study titled On the Pursuit and
Misuse of Useless Information Their experiment was simple.
Participants were divided into two groups.  Group 1 read the
following:
  stImagine that you are a loan officer at a bank reviewing the
mortgage application of a recent college graduate with a stable,
well-paying job and a solid credit history.  The applicant seems
qualified, but during the routine credit check you discover that
for the last three months the applicant has not paid a $5,000
debt to his charge card account.  Do you approve or reject the
mortgage application"st
  Group 2 saw the same paragraph with one crucial difference.
Instead of learning the exact amount of the student's debt, they
were told there were conflicting reports and that the size of the
debt was unclear.  It was either $5,000 or $25,000.  Participants
could decide to approve or reject the applicant immediately, or
they could delay their decision until more information was
available, clarifying how much the student really owed.  Not
surprisingly, most Group 2 participants chose to wait until they
knew the size of the debt.
  Here's where the study gets clever.  The experimenters then
revealed that the student's debt was only $5,000.  In other
words, both groups ended up with the same exact information.
Group 2 just had to go out of its way and seek it out.
  The result? 71% of Group 1 participants rejected the applicant.
But among Group 2 participants who asked for additional
information? Only 21% rejected the applicant.
  To say the findings are surprising is to state the obvious.
After all, everyone had precisely the same information.  So why
would the rate of rejection be three times higher in Group 1?
  The answer underscores a troubling blind spot in the way we
make decisions.  One that highlights the downside of having a sea
of information available at our fingertips, and just might
convince you to ditch your iPhone the next time you're faced with
an important choice.

Cliffhangers: Great for Television, Disastrous for Decisions
  Remember stSeinfeldst and stFriendsst? Fifteen years ago, a
handful of television shows ended on cliffhangers.  Daytime soaps
were among the first to regularly end on a climax, and stblebdst
made the practice a fixture of mainstream television.  Today,
most dramas are loathe to end an episode without one.  Even
comedies like stThe Officest and stModern Familyst now rely on
cliffhangers to draw viewers back.
  There's a psychological reason cliffhangers are so effective.
The human mind hates uncertainty.  Uncertainty implies
volatility, randomness, and danger.  When we notice information
is missing, our brain raises a metaphorical red flag and says,
"Pay attention.  This could be important."
  Generally, that curiosity is useful.  In our evolutionary past,
knowing whether that rustling in the bushes belonged to a tiger
or a mouse could have meant the difference between life and
death.  We're wired to reduce uncertainty because our minds were
adapted for another, more hazardous, time.
  Seeking out information comes with a downside, however, which
accounts for the intriguing difference between the two groups.
When data is missing, we overestimate its value.  Our mind
assumes that since we are expending resource locating
information, it must be useful.  Participants in Group 2 couldn't
help but ask for additional data.  The mind, after all, hates
information gaps.  And because their attention was focused on
whether the debt was $5,000 or $25,000, their thinking about the
loan had shifted.  They no longer saw the big picture--that the
applicant had a history of defaulting.  They were simply too
fixated on a relatively minor detail, the size of the debt.

The Seduction of Data
  The research underscores a sobering message: We're fascinated
with filling information gaps and that obsession can lead us
astray.  Especially today, when reducing uncertainty has become
all too easy.
  What's the forecast for Friday? Pick up your iPhone.  What's
Lindsey Lohan up to? Type in TMZ.  Wonder what that girl from
10th grade drama now looks like? Facebook!
  And it's not just trivial information that's easily accessible.
It's data that drives major business decisions.  There's always
one more report, one more analysis, and one more perspective
that's a click or two away.
  Neurologically, information is addicting.  Learning is
associated with the release of dopamine, the same as powerful
drugs like cocaine.  It's why we are so vulnerable to an Internet
rife with attention parasites that leave us worse for the wear.
  In a world where every click brings the promise of a discovery,
we are all at risk of becoming addicts.  The challenge lies in
differentiating between questions worth exploring and questions
best left unasked.
  Copyright Ággc) 2012 Mansueto Ventures LLC.  All rights
reserved.

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