Predecisional information acquisition: Effects of task variables on suboptimal search strategies

Effective overall performance in judgment tasks generally involves both acquisition of information and integration of the information acquired. When information is costly the decision maker must balance acquisition costs against improved decisional accuracy, a complex balancing problem in which, laboratory evidence suggests, humans often do poorly. The three experiments reported here extend this earlier evidence to different task structures, subject pools, incentive systems, information volumes, decision aids, and kind of data sources. Though each of these factors was found to affect performance, the general finding was of persistent underpurchase (buying less information overall than is optimal) and mispurchase (buying poor sources when better sources are available at the same cost), with significant inflation of overall costs. It is proposed that unaided human judgment is unequal to the complexity of the cost/benefit trade-offs involved in acquiring costly information, and that formal decision analysis should be preferred whenever the stakes justify.