IDEAS home Printed from https://ideas.repec.org/p/zbw/upadbr/b1916.html
   My bibliography  Save this paper

All or (almost) nothing? The influence of information cost and training on information selection and the quality of decision-making

Author

Listed:
  • Baethge, Caroline
  • Fiedler, Marina

Abstract

The following experiment examines the influence of cost of information and training on the quality of individual investment decisions. We expand upon the existing behavioral literature by proposing a new scenario experiment which enables us to study individual and institutional factors influencing the selection and processing of information that lead to an investment decision. The amount and type of information used, as well as the time of information processing of individual decision-makers will be measured by subjects' interaction in the experimental task. Furthermore, we examine whether or not cost of information and training indeed influence the quality of (investment) decision-making. The results suggest that training is crucial to the amount and type of information used as trained individuals make better investment decisions, using the most relevant information.

Suggested Citation

  • Baethge, Caroline & Fiedler, Marina, 2016. "All or (almost) nothing? The influence of information cost and training on information selection and the quality of decision-making," Passauer Diskussionspapiere, Betriebswirtschaftliche Reihe B-19-16, University of Passau, Faculty of Business and Economics.
  • Handle: RePEc:zbw:upadbr:b1916
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/179468/1/1023327287.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bonner, Sarah E. & Sprinkle, Geoffrey B., 2002. "The effects of monetary incentives on effort and task performance: theories, evidence, and a framework for research," Accounting, Organizations and Society, Elsevier, vol. 27(4-5), pages 303-345.
    2. Susan Artandi, 1973. "Information concepts and their utility," Journal of the American Society for Information Science, Association for Information Science & Technology, vol. 24(4), pages 242-245, July.
    3. Gary E. Bolton & Axel Ockenfels & Ulrich W. Thonemann, 2012. "Managers and Students as Newsvendors," Management Science, INFORMS, vol. 58(12), pages 2225-2233, December.
    4. Michael A. Hitt & Beverly B. Tyler, 1991. "Strategic decision models: Integrating different perspectives," Strategic Management Journal, Wiley Blackwell, vol. 12(5), pages 327-351, July.
    5. Kraemer, Carlo & Noth, Markus & Weber, Martin, 2006. "Information aggregation with costly information and random ordering: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 59(3), pages 423-432, March.
    6. Connolly, Terry & Wholey, Douglas R., 1988. "Information mispurchase in judgment tasks: A task-driven causal mechanism," Organizational Behavior and Human Decision Processes, Elsevier, vol. 42(1), pages 75-87, August.
    7. Hershey, Douglas A. & Walsh, David A. & Read, Stephen J. & Chulef, Ada S., 1990. "The effects of expertise on financial problem solving: Evidence for goal-directed, problem-solving scripts," Organizational Behavior and Human Decision Processes, Elsevier, vol. 46(1), pages 77-101, June.
    8. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    9. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
    10. Andersson, Patric, 2004. "Does experience matter in lending? A process-tracing study on experienced loan officers' and novices' decision behavior," Journal of Economic Psychology, Elsevier, vol. 25(4), pages 471-492, August.
    11. Devine, Dennis J. & Kozlowski, Steve W. J., 1995. "Domain-Specific Knowledge and Task Characteristics in Decision Making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 64(3), pages 294-306, December.
    12. Niklas Karlsson & George Loewenstein & Jane McCafferty, 2004. "The Economics of Meaning," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 30, pages 61-75.
    13. Stigler, George J., 2011. "Economics of Information," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 5, pages 35-49.
    14. J B Heaton, 2002. "Managerial Optimism and Corporate Finance," Financial Management, Financial Management Association, vol. 31(2), Summer.
    15. Bonner, Se & Lewis, Bl, 1990. "Determinants Of Auditor Expertise," Journal of Accounting Research, Wiley Blackwell, vol. 28, pages 1-20.
    16. Libby, R & Lipe, Mg, 1992. "Incentives, Effort, And The Cognitive-Processes Involved In Accounting-Related Judgments," Journal of Accounting Research, Wiley Blackwell, vol. 30(2), pages 249-273.
    17. Robert S. Taylor, 1962. "The process of asking questions," American Documentation, Wiley Blackwell, vol. 13(4), pages 391-396, October.
    18. Connolly, Terry & Thorn, Brian K., 1987. "Predecisional information acquisition: Effects of task variables on suboptimal search strategies," Organizational Behavior and Human Decision Processes, Elsevier, vol. 39(3), pages 397-416, June.
    19. Keasey, Kevin & Moon, Philip, 1996. "Gambling with the house money in capital expenditure decisions: An experimental analysis," Economics Letters, Elsevier, vol. 50(1), pages 105-110, January.
    20. Shanteau, James, 1992. "Competence in experts: The role of task characteristics," Organizational Behavior and Human Decision Processes, Elsevier, vol. 53(2), pages 252-266, November.
    21. Barrick, John A. & Spilker, Brian C., 2003. "The relations between knowledge, search strategy, and performance in unaided and aided information search," Organizational Behavior and Human Decision Processes, Elsevier, vol. 90(1), pages 1-18, January.
    22. Dane, Erik & Rockmann, Kevin W. & Pratt, Michael G., 2012. "When should I trust my gut? Linking domain expertise to intuitive decision-making effectiveness," Organizational Behavior and Human Decision Processes, Elsevier, vol. 119(2), pages 187-194.
    23. Goldstein,William M. & Hogarth,Robin M. (ed.), 1997. "Research on Judgment and Decision Making," Cambridge Books, Cambridge University Press, number 9780521483346, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ondrej Rydval, 2012. "The Causal Effect of Cognitive Abilities on Economic Behavior: Evidence from a Forecasting Task with Varying Cognitive Load," Jena Economics Research Papers 2011-064, Friedrich-Schiller-University Jena.
    2. Jan Hausfeld & Sven Resnjanskij, 2017. "Risky Decisions and the Opportunity Costs of Time," TWI Research Paper Series 108, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    3. Schmidt, Robert & Schwieren, Christiane & Vollmann, Martin, 2020. "The value of verbal feedback in allocation decisions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 87(C).
    4. Butler, Adam B. & Scherer, Lisa L., 1997. "The Effects of Elicitation Aids, Knowledge, and Problem Content on Option Quantity and Quality," Organizational Behavior and Human Decision Processes, Elsevier, vol. 72(2), pages 184-202, November.
    5. Nagler Matthew G., 2007. "Understanding the Internet's Relevance to Media Ownership Policy: A Model of Too Many Choices," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-28, June.
    6. Andrew Caplin & Mark Dean & Daniel Martin, 2011. "Search and Satisficing," American Economic Review, American Economic Association, vol. 101(7), pages 2899-2922, December.
    7. Jhunjhunwala, Tanushree, 2021. "Searching to avoid regret: An experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 298-319.
    8. Mahesh Balan U & Saji K. Mathew, 2021. "Personalize, Summarize or Let them Read? A Study on Online Word of Mouth Strategies and Consumer Decision Process," Information Systems Frontiers, Springer, vol. 23(3), pages 627-647, June.
    9. Samek, Anya & Hur, Inkyoung & Kim, Sung-Hee & Yi, Ji Soo, 2016. "An experimental study of the decision process with interactive technology," Journal of Economic Behavior & Organization, Elsevier, vol. 130(C), pages 20-32.
    10. Lau, Yeng Wai, 2014. "Aggregated or disaggregated information first?," Journal of Business Research, Elsevier, vol. 67(11), pages 2376-2384.
    11. Erlend Dancke Sandorf & Danny Campbell, 2019. "Accommodating satisficing behaviour in stated choice experiments," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 46(1), pages 133-162.
    12. Cao, Qian & Li, Jianbiao & Niu, Xiaofei, 2019. "The role of overconfidence in overweighting private information: Does gender matter?," EconStor Preprints 203448, ZBW - Leibniz Information Centre for Economics.
    13. Schunk, Daniel, 2009. "Behavioral heterogeneity in dynamic search situations: Theory and experimental evidence," Journal of Economic Dynamics and Control, Elsevier, vol. 33(9), pages 1719-1738, September.
    14. Meissner, Philip & Wulf, Torsten, 2014. "Antecendents and effects of decision comprehensiveness: The role of decision quality and perceived uncertainty," European Management Journal, Elsevier, vol. 32(4), pages 625-635.
    15. Tian, Ye & Li, Yudi & Sun, Jian, 2022. "Stick or carrot for traffic demand management? Evidence from experimental economics," Transportation Research Part A: Policy and Practice, Elsevier, vol. 160(C), pages 235-254.
    16. Momi Dahan & Tehila Kogut & Moshe Shalem, 2009. "Do Economic Policymakers Practice what they Preach? The Case of Pension Decisions," CESifo Working Paper Series 2783, CESifo.
    17. Andreas Klein, 2011. "Die Entwicklung eines agentenbasierten Basismodells zur Bestimmung der deckungsbeitragsmaximierenden Anzahl von Außendienstmitarbeitern," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 21(2), pages 189-210, January.
    18. Becker-Peth, Michael & Thonemann, Ulrich W., 2016. "Reference points in revenue sharing contracts—How to design optimal supply chain contracts," European Journal of Operational Research, Elsevier, vol. 249(3), pages 1033-1049.
    19. Tamara A. Lambert & Christopher P. Agoglia, 2011. "Closing the Loop: Review Process Factors Affecting Audit Staff Follow‐Through," Journal of Accounting Research, Wiley Blackwell, vol. 49(5), pages 1275-1306, December.
    20. Daniela Di Cagno & Arianna Galliera & Werner Güth & Francesca Marzo & Noemi Pace, 2017. "(Sub) Optimality and (non) optimal satisficing in risky decision experiments," Theory and Decision, Springer, vol. 83(2), pages 195-243, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:upadbr:b1916. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/fwpasde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.