Especially during the holidays, online shopping can be overwhelming. Have you ever found yourself spending hours comparing nearly identical products, delving into details that don't actually matter to you? Have you ever finally reached a decision only to find that the product you want is out of stock? Unfortunately, if so, there is a good chance you did not end up making the best choice.
According to new research from behavioral economist Ian Chadd, an assistant professor at Rensselaer Polytechnic Institute, irrelevant information or unavailable options often cause people to make bad choices. When both elements are present, the probability of a poor decision is even greater.
Published in Experimental Economics, Chadd's research examined the behavioral economic concept of free disposal, where resources can be ignored without having a cost. The standard belief has been that, if irrelevant information is included when presenting a product or idea, a consumer can easily skip over the data without taking time or using cognitive power.
Through an experiment involving 222 individual tests each consisting of more than 40 questions, Chadd's research revealed that, in fact, the way information is presented does matter. Decisions made in an environment of irrelevant information carry time, cognitive, and consequence costs.
"These findings tell us a lot about choice architecture, the design process that goes into the creation of environments where people make decisions," Chadd said. "In environments where you have lots of information available, it's exceptionally important that consumers have the ability to filter out information that they find to be irrelevant."
The research also showed that consumers hold a deep "preference for simplicity" in that they are willing to pay a price to reduce the amount of irrelevant and unavailable information.
"This is important insight for policy makers and choice architects alike," Chadd said. "The goal should always be to opt towards simpler and more flexible presentation of information, so that consumers can decide for themselves what is and is not irrelevant and then not just ignore it if they see it, but also give them the option not to see it."
FAQs
In short, even demonstrably false or irrelevant information can influence judgments, which in turn influence decisions. In such cases, Professors Tversky and Kahneman wrote in 1981, “the adoption of a decision frame is an ethically significant act.”
How will irrelevant data lead to irrelevant information? ›
Irrelevant data can skew results, lead to incorrect conclusions, and waste resources. They can also complicate the analysis process, making it more difficult to extract meaningful insights from the relevant data.
Why is information important in decision making? ›
Information is valuable in decision making as it can confirm choices or prevent regrettable decisions. Access to information is crucial in decision making as it allows for more rational and substantiated decisions, helps determine uncertainty and outcomes, and maximizes benefits.
What is the difference between relevant and irrelevant data? ›
Relevant information would include information that pertains to the subject/topic under consideration or being discussed. Irrelevant information is not connected with what you are discussing or examining and has no bearing on the outcome.
What is irrelevant in decision-making? ›
Costs that stay the same, regardless of which alternative is chosen, are irrelevant to the decision being made. Because an irrelevant cost may be a relevant cost in a different management decision, it is important to formally define and document costs that should be excluded from consideration when reaching a decision.
What are irrelevant factors? ›
Irrelevant factors, conversely, were denned as those which do not relate directly to the content or delivery of the communication.
How can bad data influence the decision-making process? ›
Bad data undermines the accuracy and reliability of insights, which in turn leads to poor decision-making. These bad decisions then manifest as underperformance and hinder an organization's growth and success.
What are the effects of using unreliable information in decision-making? ›
On the other hand, unreliable data can lead to poor decision-making, potential errors, and wasted resources.
What is an example of irrelevant data? ›
Examples of Irrelevant Data
Outdated Data: Data that's no longer accurate is irrelevant because it can lead to poor decision-making. For example, if you're using data from 2018 to make decisions about the current market, it's likely to be outdated and create incorrect insights.
What is the most important thing when making a decision? ›
The most important thing to remember when faced with an important decision is to determine what type of impact the decision will have on the people involved. Many bad decisions can be remedied, however, the more people the decision impacts, the more difficult it will be to remedy the situation.
In decision analysis, the value of information is the improvement in the outcomes of our actions that we would expect if we could reduce or eliminate uncertainty before making a decision.
What information do you need to make a decision? ›
To make a decision, you must first identify the problem you need to solve or the question you need to answer. Clearly define your decision. If you misidentify the problem to solve, or if the problem you've chosen is too broad, you'll knock the decision train off the track before it even leaves the station.
When can you say that an information is relevant not relevant? ›
Relevance considers the importance of the information for your research needs. A relevant information source answers your research question. To determine relevance, the purpose and bias must be understood. In fact, all aspects of evaluation must be taken into consideration to determine relevance.
How do you know if information is relevant? ›
Here is a list of things you should look for in your results list to determine whether a resource is relevant to your research needs.
- What is it about? ...
- What is the subject area focus? ...
- Are you looking for recent information? ...
- Is it a book or an article? ...
- Is it scholarly? ...
- What type of article is it?
Relevant information refers to data that is pertinent, applicable, or crucial for a specific purpose, decision-making situation, or problem-solving process. In the context of decision-making, whether it's in business, personal life, or any other scenario, relevant information can influence the outcome of a decision.
What are the important factors for decision-making? ›
8 Factors You Really Need to Consider Before You Make Any Big Decision
- Rationality. First, run this decision through the rational, analytical part of your brain. ...
- Intuition. ...
- Relationships. ...
- Alignment. ...
- Counsel. ...
- Negative Drivers. ...
- Cost. ...
- Risk and Reward.
Significant factors include past experiences, a variety of cognitive biases, an escalation of commitment and sunk outcomes, individual differences, including age and socioeconomic status, and a belief in personal relevance.
How does the focus on an irrelevant decision affect the research process? ›
In summary, an irrelevant decision can negatively affect the research process by wasting time and resources, producing biased or inaccurate results, and limiting the generalizability of the findings.
What are relevant and irrelevant costs in decision-making? ›
A relevant benefit is a benefit that differs between alternatives. An avoidable cost is a cost that can be eliminated, in whole or in part, by choosing one alternative over another. Avoidable costs are relevant costs. Unavoidable costs are irrelevant costs.
