Information Bias

We believe more information always leads to better decisions — but beyond a certain point, additional information confuses rather than clarifies and leads to worse outcomes.

• Doctors given more test results and patient background data make no more accurate diagnoses than those given a limited set — but become significantly more confident in their diagnoses.
• Investors who consume vast amounts of financial news make no better investment decisions than those who check prices once a year — but trade far more, incurring more costs.
• In one study, horse-racing handicappers given more data points made identical predictions but felt dramatically more certain — information fed confidence, not accuracy.