The impact of information diversity on information overload effects in unstructured managerial decision making

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Abstract
Psychologists have found that as the number of cues pro vided to a decision maker increases beyond approximately "10 items of information" [1] decision performance falls. This has become known as the information overload effect. Business researchers have generalized this effect to the business deci sion-making domain. Iselin [2] found in a highly structured decision-making task that the magnitude of the information overload effect varied with the diversity of the information. The information diversity in a set of cues was defined as the number of dimensions (unrelated vanables) in the set. It was found that the higher the information diversity, the larger was the information overload effect. The major objective of the research in this paper was to test if this information diversity effect generalized to unstructured decision-making tasks. Con sequently in an experiment, information diversity was manipu lated in an information overload situation in an unstructured managenal decision-making task. Two other independent vari ables studied were task learning and decision experience. The dependent vanable, decision performance, was operationalized to profit and decision time. The results from the experiment showed that increasing information diversity increased the information overload effect on decision time, i.e. decision time increased. This effect was hypothesized. However, information diversity did not affect profit. The hypothesized effects for learning and expenence were largely supported In general, high expenence and learning both resulted in higher decision performance. The experiment revealed a number of interac tions between the variables. The implications of these findings for practice and future research were considered.