Why Too Much Data Disables Your Decision Making

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:

Imagine 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?

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 Seinfeld and Friends? Fifteen years ago, a handful of television shows ended on cliffhangers. Daytime soaps were among the first to regularly end on a climax, and 24 made the practice a fixture of mainstream television. Today, most dramas are loathe to end an episode without one. Even comedies like The Office and Modern Family 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.

[Image: Flickr user JacobFG]

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32 Comments

  • Sam Gouthy

    Yes, the experimenters' head fake with the $5,000 or is it $25,000? debt was clever. However, did anyone ask the clever experimenters for the *really* useful extra bit of information: "WHY has this applicant with a solid work and credit history not made a payment on this particular $5,000 debt for the last 3 months?"

    The common sense step would be to pick up the phone and actually call the applicant and ask.

    A defensive or evasive response from the student applicant would make rejecting the application a no-brainer right decision. But what if the applicant was to explain all of the $5,000 credit card debt was for a major purchase which is now in dispute with the merchant or service provider for refusing to honor a warranty, etc., and provides written proof of the dispute with the credit card company?

    Perhaps the real takeaway from the experiment is that the overwhelming majority of the experiment subjects failed to demonstrate proactively critical thinking and reasoning: 71% of group 1 rejected the application out of hand, apparently incurious as to the reason behind the one major black mark on an otherwise spotless credit history, while 79% of group 2 approved the application, again with no effort to seek any insight into the $5,000 debt, but apparently convinced they did their due diligence by confirming the debt was $5,000 and not $25,000!

  • Anthony

    After with many of the comments listed. The writer of this arrival must not understand basic human psychology. The second group approved more in comparison to 25,000 vs group one comparing Debt to 0.00$ a better example of to much information would have been compared to discovering why he was late on his payments.

  • David Williams

    Read neurologist Antonio Damasio's "Descartes Error".  He presents an emotion-based model of decision making -  all will become clear!   @asiadigitalmojo

  • DG

    What if data was useless? How fast is our world moving where peices of information i.e. data, from 29 secs ago is still valuable? Ask yourself-- are you really making decisions for the future or are you living on dead data? Data is not as valuable as one might think. It's the meaning of the data, the knowledge of what that data means that the technologist in you should be studying. The future decision maker of tomorrow will know the future and make future decisions (strategy decisions) not on 29 second old data, but on known ways to predict the future. Do you know how to predict the future? Is this possible? Yes, it is. Don't get hung up on data. Find ways to leverage expertise and knowledge, and leave data in the dust.

  • *****

    TV programmes occupy only 6 out of every 10 minutes on the air, and we wonder why students all seem to have ADDS! They can't construct a sentence or a paragraph because they can't construct a thought of any complexity.

  • *****

    So true. I used to clean all the old stuff off the noticeboards at work 
    so people would read the new stuff.Sigh! 

  • Kwkeirstead

     I challenge the "too much data disables your decision making" statement.

    We have knowledgebases, data warehouses, e-Hubs the collect and consolidate all sorts of data and the only negative to collecting data not needed for decision making is it's a waste of time and money.

    The problem is you don't always know what information you are going to need to make a particular decision. So, given a mixed group of decision makers, all will have "too much data, most of the time".

    The solution is to use natural language processors and other wizards to extract from "too much data" the part you need to make a specific decision.

    So what disables decision making is the lack of proper tools to extract the data you need or lack of the required skills to use tools that are available.

  • John Eaton

    OK, so I'll admit to getting thoroughly lost in the internet weeds once or twice when researching a topic, or to being struck by "analysis paralysis", but isn't it all about context? I've been on the other side of a mortgage decision and wished I had an opportunity to explain my credit score. What's missing in this example is pace... when you have the chance to look a little more/harder/wider/deeper, do you? When it's time sensitive and you can vouch for the quality of one or two data points do you just go for it?

    I'm typically a pretty deliberate decision maker, so I'll generally try to get a 360-degree look-around if I have time. Not that I'm worried about missing one piece of critical data but more to assure myself I've given it proper context. Nothing happens in isolation, so working through a couple of scenarios always helps. But one other thing this article misses is the "value" of the source for the extra data point. If I told you the number would it be more or less credible as if you learned it some other way? Do you take word-of-mouth or hearsay as "directional" references or fact? I tend to be more skeptical the more important the decision.

    Over all a good piece, and also good to consider that maybe the challenge lies in differentiating between answers worth acting on and answers best left alone.

  • David Molden

    I agree the results say more about comparison than data. Read about comparison through NLP or Cialdini. Smart sales execs know how this works. Academics often go down false trails due to an over abundance of and reliance on research data - they miss the wood for the trees. By the way the link is dead.

    David Molden.

    www.quadrant1.com

  • Andrew M

    The fact that the borrower has the potential of being behind $25,000 and still have a good credit history is important information, I would think. That suggests rather deep pockets, doesn't it?

    The fact that it was "only" $5,000 means that this rich college kid could probably pay off his debt whenever he wanted and is just choosing not to for some reason (identity theft? Didn't get the bill? Disputed charges?).

    If this wasn't a mortgage application, the mortgage might have been the reason--the guy could have bought too much house. Since that's not the problem, I think you need more information after all.

  • marykparker

    Being overwhelmed by decisions can have implications for everyday life in the aisles of supermarkets. When I was stationed in Guam, we had only a few choices for anything. My shopping trips took 20 minutes. Back here on the mainland, it's an hour minimum. It was so much easier when I only had to make a decision between two dishwashing soaps.

  • pippy

    There's a GREAT book that describes this issue, 'McDonald's versus Jihad,' written back in the 90's(?).  The observation that stuck with me was that in America, we *appear* to have a choice, because of all the products, but the reality of it is, you WILL buy SOMETHING.

    So, what appears to be a choice, due to the overwhelming number of choices, is actually a manipulation tool to have you spend more of your resources (time AND money) chasing after a supposed freedom.

    Although given enough money to buy something opposed to having not enough money to buy anything, most humans fall into the rather-be-in-the-first-category.

    Best defense in such a cruel world: make a list, and stick with it.  Not that I follow my own advice.  Somehow, I really think we'd benefit as a species if everything electronic just stopped working tomorrow.

  • Mac_Pap

    Of course. That's what "institutional" advertizing is all about. So is advertizing overkill: if one sponsor pisses you off, you'll buy someone else's stuff instead.

    The origin of the term "ripoff" in the 60s was in the process of stealing someone's identity, psyche and culture (like tearing the skin off their backs), then selling them back a cheaper, shallower version of it for profit.

  • Anthony

    In this example you are already IN McDonald's. Your goal was to purchase something, no manipulation was necessary. The amount of choices has no factor. A great example might be be grocery stores and the end displays or items at the register

  • charles000

    Oddly enough (or perhaps not that oddly), though I can agree on the general concept of info overload clouding decisions, the example "experiment" cited was ridiculously skewed.
    That sort of rigid, automaton thought process is what has caused much of the economic and business demise we witness now.

    Why even bother having a human in the decision rendering process at all, if there is no flexibility or other realms of information that can render the "best" decision.

    The point of the article appears to be that robots should replace humans in decision rendering . . . and life would be so much more perfectly organized.

    Sadly, that is already the case in myriad institutions and businesses.

    Is that the intended goal here?   Really???

    Just wondering

  • Andres Peluffo

    Malcom Gladwell also use the anchoring idea in Blink and gives much better examples of the phenomena the article is trying to explain.

  • Ron Friedman

    Thanks for pointing this out. 

    Here's the link: http://psych.princeton.edu/psy...

    Another interesting implication of this decision making blind spot, referenced in the discussion: "Salespeople... can set up apparent uncertainties, only to resolve them with what appears to be excellent news."