Academic journal article Psychonomic Bulletin & Review

Information Overload or Search-Amplified Risk? Set Size and Order Effects on Decisions from Experience

Academic journal article Psychonomic Bulletin & Review

Information Overload or Search-Amplified Risk? Set Size and Order Effects on Decisions from Experience

Article excerpt

Published online: 21 March 2013

© Psychonomic Society, Inc. 2013

Abstract How do changes in choice-set size influence in- formation search and subsequent decisions? Moreover, does information overload influence information processing with larger choice sets? We investigated these questions by letting people freely explore sets of gambles before choosing one of them, with the choice sets either increasing or decreasing in number for each participant (from two to 32 gambles). Set size influenced information search, with participants taking more samples overall, but sampling a smaller proportion of gambles and taking fewer samples per gamble, when set sizes were larger. The order of choice sets also influenced search, with participants sampling from more gambles and taking more samples overall if they started with smaller as opposed to larger choice sets. Inconsistent with information overload, information processing appeared consistent across set sizes and choice order conditions, reliably favoring gambles with higher sample means. Despite the lack of evidence for information overload, changes in information search did lead to systematic changes in choice: People who started with smaller choice sets were more likely to choose gambles with the highest expected values, but only for small set sizes. For large set sizes, the increase in total samples increased the likelihood of encountering rare events at the same time that the reduction in samples per gamble amplified the effect of these rare events when they occurred-what we call search-amplified risk. This led to riskier choices for individuals whose choices most closely followed the sample mean.

Keywords Information overload * Decisions from experience * Risk * Choice overload * Consumer behavior

From what we wear to how we entertain ourselves, we are constantly choosing among sets of alternatives. It is as if oiu lives are merely extended department store experiences, where we commonly make hundreds of choices before we reach the checkout aisle. Although these decisions often rely on past experience-for which there is ample literature (Hertwig, Barron, Weber, & Erev, 2004; Hertwig & Erev, 2009; Rakow, Demes, & Newell, 2008; Ungemach, Chater, & Stewart, 2009)-two important qualities separate them from what has been the dominant focus of prior research. First, oiu choices often involve more than two options -sometimes ranging into the hundreds (consider cheeses in French supermarkets)-and therefore poten- tially lead to choice-set size effects that are predicted to involve information overload (Iyengar & Lepper, 2000; Mick, Broniarczyk, & Haidt, 2004; Scheibehenne, Greifeneder, & Todd, 2010; Schwartz, 2004). Second, our choices are often sequential, with the order of choice-set sizes varying from one decision to the next (e.g., there may be more kinds of cheese than bananas). As a result, the order of choice sets may lead to choice- set size effects that carry over from one decision to the next (Levav, Heitmann, Herrmann, & Iyengar, 2010; Levav, Reinholtz, & Lin, 2012). This points to the need for a more fine-grained and practically relevant study of information processing under choice overload.

Here we investigated the influences of choice-set size and choice order effects on information search and information processing. In particular, we focused on the prospect that information overload may influence search, choice, and the role of infrequent, risky events. This combines two previously independent literatures on consumer choices over multiple options and decisions from experience. Before describing oiu study in more detail, we will briefly review the relevant findings from these two literatures.

Information overload and choice order effects

Choices with many options have been suggested to lead to choice overload. As examples, choices over many options have been shown to lead to forgoing decisions or choosing simpler options (Chernev, 2003; Greifeneder, Scheibehenne, & Kleber, 2010; Iyengar & Kamenica, 2010; Iyengar & Lepper, 2000; Reutskaja & Hogarth, 2009; Schwartz, 2004; Shah & Wolford, 2007). …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.