Payne, Professor of business at Duke University as well as in psychology and neuroscience, quotes Herbert A. Simon, a founder of behavioral economics, who once noted we may have a “wealth of information” that is creating a “poverty of attention.” The scarce resource for good decision-making was not information, argued Simon, but rather attention. How people allocate this scarce resource can lead to poorer, not better decisions.
Everyone is familiar with the difficulty of making decisions related to health, retirement and wealth management where the options are unfamiliar. It is not that information is lacking, it is often that it is too much, the sources too varied and the advice conflicting. Even a simple task like choosing a cell phone can seem overwhelming in terms of the information available.
As a result, says Payne, people respond by simply deferring a decision – or avoid making one at all. Other decision-avoidance strategies include staying with the status quo or default option. People also cope with information overload by changing how they process information. There is, Payne notes, an increase in the use of simplifying heuristics that either use less (not more) information, or use information in less exhausting ways.
This is not necessarily a poor strategy when faced with a sea of information. Simple strategies can often perform remarkably well as tools for decision-making. The secret is to focus attention on the information most relevant to your decision. “Unfortunately, attention resources decline over time and too often the information we focus on is driven by what just happens to be most salient in our environment. That is, we look at what is easiest to process, not what is the most important information for the decision at hand,” he explains.