If information is power, you might assume that getting information more often should be powerful, too. Not so fast, say two business school professors.
“In many situations, real-time data comes in on a continuous basis, and then you, as a decision maker, have to decide which data is information and which is pure noise,” says Jayashankar M. Swaminathan, Kay and Van Weatherspoon Distinguished Professor of Operations, Technology and Innovation Management at the University of North Carolina’s Kenan-Flagler Business School. “That’s not an easy task, which is what this study shows.”
Swaminathan and Nicholas H. Lurie, assistant professor of marketing at Georgia Tech’s College of Management, conducted studies of undergraduate students to investigate how the frequency of information reports affects decision making. The researchers discovered that receiving information more frequently led to worse decisions, particularly when there was more “noise” — that is, random fluctuations — in the data.
“Is Timely Information Always Better? The Effect of Feedback Frequency on Decision Making,” an article forthcoming in Organizational Behavior and Human Decision Processes, describes the first study and establishes the fundamentals. Seventy-six students played a game in which they were retailers stocking the shelves with a perishable hypothetical product. Different sets of participants placed orders for periods analogous to either every day, twice a week or once a week. The participants were then shown the actual demand during... To read the complete article, login or sign-up using the form below.
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