Information Load and Consumer Decision Making NARESH K.

MALHOTRA* In an experimental investigation of the effects of information load on consumer decision making, respondents experienced information overload when they were provided with 10, 15, 20, or 25 choice alternatives or with information on 15, 20, or 25 attributes. Alternative measures of the dependent variable yielded similar results, thus enhancing confidence in these findings. T he fundamental premise on which the information-load paradigm is based is that consumers have finite limits to absorb and process information during any given unit of time. Thus, if consumers are provided with "too much" information at a given time, such that it exceeds their processing limits, overload occurs leading to poorer decision making and dysfunctional performance. This proposition derives considerable theoretical and empirical support from several disciplines. It is now well accepted that the processing capacity of the human memory is limited. In fact, the different models of memory that have been proposed, such as the multiple-store concept (Atkinson and Shiffrin 1968), level of processing (Craik and Lockart 1972), and the activation model (Collins and Loftus 1975) are all consistent with the idea of limited processing capacity (Bettman 1979a; b). Attempts have also been made to measure the size of the memory span. Miller (1956) reviewed evidence indicating that the processing capacity of the short-term memory was

approximately seven chunks of information. In combining data from several experiments, Simon (1974) concluded that the chunk capacity of short-term memory is in the range of five to seven. More recently, Broadbent (1975) has suggested that this magic number may be more like three or four. Other research traditions in human information processing also provide support for the notion of information overload. A central theme in the theory of Schroder, Driver, and Streufert (1967) is that differentiation and integration in cognition and behavior increase with increasing environmental input until an optimal information-processing level is reached. If environmental input increases further, the information-processing level begins to decrease. The empirical work of Streufert (1970), Streufert and Driver (1965), Streufert, Driver, and Haun (1967), Streufert and Schroder (1965), and Streufert, Suedfeld, and Driver (1965) provides strong support for their postulate. The complexity theory of Streufert and Streufert (1978), as well as the work of Cummings, O'Connell, and Huber (1978), Streufert (1978), and Suedfeld (1978) is also consistent with this proposition. Perhaps the most important generalization that emerges is that an individual is a limited informationprocessing system (Newell and Simon 1972; Payne 1976a). The notion of limited processing capacity is also basic to information theory (Shannon and Weaver 1949) and is embodied in the concept of channel capacity. However,

information theory suggests that processing capacity should not be seen as constant but as a function of the signal-tonoise ratio in the system (Pendse 1978). Other disciplines that provide support for dysfunctional consequences of processing "too much" information include clinical prediction (Bartlett and Green 1969, Kelly and Fiske 1951) and statistical prediction (Wherry 1931; 1940). Mention must also be made of a stream of research in ergonomics that has investigated the physiological parameters of information load. In particular, the information-load effects have been examined in terms of heart frequency, sinus arrhythmia, systolic and diastolic blood pressure, and rate of respiration (Boyce 1974; Ettema and Zielhuis 1971). In view of this broad range of theoretical and empirical research, the concept of information overload does seem appealing. However, the question remains whether empirical research in the consumption setting has been able to demonstrate the limited capacity of consumers to process information. In particular, it is important to determine the number of choice alternatives and attributes consumers can simultaneously process without suffering the negative effects of overload. *Naresh K. Malhotra is Assistant Professor, College of Management, Georgia Institute of Technology, Atlanta, GA 30332. The author would like to thank Professor Arun K. Jain, who supervised the dissertation on which this article is based. Appreciation is also extended to Professors Edward Conlon, David Herold, Leonard Parsons, and Gerrit Wolf and

two reviewers for helpful comments on an earlier draft of this paper. 419 C JOURNAL OF CONSUMER RESEARCH 0 Vol. 8 0 March 1982 This content downloaded from 203.145.159.148 on Wed, 2 Apr 2014 00:27:45 AM All use subject to JSTOR Terms and Conditions420 THE JOURNAL OF CONSUMER RESEARCH PAST RESEARCH ON INFORMATION LOAD EFFECTS ON CONSUMERS The attempt to empirically investigate the effect of information load on consumers was pioneered by Jacoby and his associates (Jacoby, Speller, and Berning 1974; Jacoby, Speller, and Kohn 1974). In their experiments, they systematically varied the amount of product information provided in terms of the number of brands in the choice set and the number of attributes per brand and examined the effects of information provision on decision-making performance. Based on their investigations, these authors concluded that consumers "actually make poorer purchase decisions with more information" (Jacoby, Speller, and Kohn 1974, p. 63). However, critics raised several conceptual and methodological issues (Russo 1974; Summers 1974; Wilkie 1974). The major objections were: * Total information should not be defined in terms of number of brands times number of attributes per brand. * When comparing the effects of the number of alternatives on choice accuracy, one should account for the effect of chance factors. * The choice-accuracy measures used in the Jacoby studies

may not be appropriate. * The effects of stimulus variables, such as the relative attractiveness of choice alternatives and the salience.of the information provided, should also be considered. Later, in reviewing this controversy, Jacoby acknowledged that their investigations "did not generate unambiguous results" (Jacoby 1977, p. 571). Scammon (1977) also investigated the information-load paradigm. She varied the number of attributes and the format in which information was provided to the consumers at two levels each. However, her study has limited usefulness, as the number of brands was kept constant and the number of attributes was not varied over a sufficient number of levels (Wilkie 1974). Moreover, a reanalysis of the data obtained in these studies, by employing a more powerful analytical procedure, has indicated that, contrary to claims made by these authors, information overload did not occur in their experiments (Malhotra 1979; Malhotra, Jain, and Lagakos, forthcoming). Thus, as Bettman (1979a, p. 206) notes, "whether information overload occurs and hinders consumer choices is still an open issue." Hence, an empirical examination of the effects of information load on decision-making performance was undertaken. The design, data collection, analysis and results of the investigation are described in the following. STUDY DESIGN In designing this study, an effort was made to overcome

the major conceptual and methodological limitations of previous investigations. In previous research the number of alternatives and the number of brands used to examine information load effects were restricted to 16 or less. Wilkie (1974) has emphasized the need to include a wider range of alternatives and attributes to demonstrate the information-overload premise. Hence, a 5 (number of alternatives) x 5 (number of attributes), two-factor, between-subjects design was employed to avoid the demand artifacts and contaminations due to carry-over effects and learning that arise in within-subjects design (Sawyer 1975). It is for this reason that all the previous investigations of informationload effects on consumers have employed between-subjects designs (Jacoby, Speller, and Berning 1974; Jacoby, Speller, and Kohn 1974; Scammon 1977). The more recent psychological studies that have examined overload effects (Milord and Perry 1977) have also adopted between-subjects designs. The number of alternatives in the choice set was varied from five to 25 in increments of five. The number of attributes on which information was provided was also varied from five to 25 in increments of five. Manipulation checks on a pretest sample indicated that consumers perceived these levels of the number of alternatives and attributes to be sufficiently different. Pretests also indicated that the choice task was meaningful to the respondents for each of the 25 treatment conditions (cells).

The choice set consisted of hypothetical profiles of houses, each profile described on a separate index card (Malhotra 1979). For generating the profiles, salient attributes of houses were identified by a review of literature and personal interviews with pretest samples of 20 households and seven real estate firms. This choice setting was influenced by the following considerations: * The decision to buy a house normally entails substantial information seeking and processing; * A house is a product that is used and understood by almost everybody; * It is a complex producthat is evaluated in terms of many salient attributes. Given the problems associated with the use of correct choice in assessing the effects of information load (Summers 1974), it is desirable that a self-report measure on information overload also be included in the design. Milord and Perry (1977) have also employed a self-report measure to assess overload and have strongly argued for the necessity of such a measurement. They maintain that "the necessary condition for overload is whether or not the individual feels overloaded rather than whether or not he is required to process X bits of information" (p. 133). Inclusion of the correct-choice measure employed in the Jacoby studies would permit comparison with previous investigations and hence is desirable. Jacoby, Speller, and Berning (1974) and Jacoby, Speller, and Kohn (1974) assume that

the respondents are optimizers who would choose their "best" brand. However, some researchers, like Simon (1957), have suggested that consumers are basically satisficers rather than optimizers. Accordingly, information-load effects were also investigated by defining a satisficing measure of correct choice. Measures on certain subjective psychological states as used by Jacoby and his co-workers provide a richer understanding of the effects of information load and were retained in this investigation. This content downloaded from 203.145.159.148 on Wed, 2 Apr 2014 00:27:45 AM All use subject to JSTOR Terms and ConditionsINFORMATION LOAD AND DECISION MAKING 421 Summers (1974) and Wilkie (1974) have suggested that .the occurrence of information overload will be mediated by relevant personality and situational variables. In particular, the relative attractiveness of the choice alternatives, attribute salience, and relevant socioeconomic and demographic variables need to be explicitly considered in the information-load paradigm. In addition, the personality variable of cognitive differentiation (Goldstein and Blackman 1978) is closely related to information processing and was also included in the study. Streufert (1970) has shown the usefulness of including cognitive differentiation in investigating the effects of information load. DATA COLLECTION The data were obtained in the fall of 1978 by personal interviews with 300 male and female heads of households in a major metropolitan area. The interviews were con-

ducted either individually or in small groups of two to six. The respondents were recruited through cooperative social and religious institutions, to which token donations were made. The selection procedure attempted to obtain a so*ciodemographically heterogeneous sample. A majority of the sample (74.3 percent) consisted of females, with 87.0 percent of the respondents being married. In terms of education, 49.4 percent had undergraduate degrees. About 27.3 percent of those interviewed had high school education only, while the remaining sample had beyond college education. Most of the respondents (64.&percent) were in the age group of 31 to 50. However, 18.7 percent were more than 50 years old, and 16.7 percent were less than 30 years old. Only 34 percent of the respondents were employed full-time. A majority of the respondents (64 percent) were homemakers. Others tended to be employed either as professional and technical workers (16 percent), or managers and administrators (six percent). An overwhelming majority (88 percent) owned their place of residence. As many as 60 percent of the respondents had an annual family income in the range of $15,000 to $30,000. However, 19 percent had incomes below $15,000, and 21 percent had incomes exceeding $30,000. Twelve respondents were randomly assigned to each of the 25 treatment conditions. Depending on the particular treatment condition (cell), each respondent was presented with the appropriate number of hypothetical profiles of

houses, described in terms of the appropriate number of attributes. The respondents were required to rank order the profiles in terms of their preference to buy the houses described by the profiles. They were then asked to indicate on a binary scale whether too much information had been provided so that they felt confused and could not make best choices when ranking the profiles. Next, they responded to a battery of six subjective psychological-state measures on seven-point, Likert-type scales. The specific measures used were: feelings of certainty, satisfaction, confusion, desire for more information, information used, and perception of amount of information provided. The respondents were also asked to provide, on sevenpoint scales, the salience of the attributes on which information was provided. Profiles of the respondents' ideal houses were obtained using the attributes and levels employed to construct the profiles in their choice sets. Following Jacoby, Speller, and Berning (1974) and Jacoby, Speller, and Kohn (1974), all respondents were asked to imagine their ideal house. They then indicated one desired level for each attribute on which information was provided. Jacoby (1977) has discussed the issues involved in the measurement of a respondent's ideal alternative and argued in favor of the approach adopted here. Finally, Pinson's (1975) instrument, an adptation of Bieri's reptest, was administered to measure cognitive complexity and the standard socioeconomic and demographic information ob-

tained. Following Jacoby, Speller, and Berning (1974); Jacoby, Speller, and Kohn (1974); and Scammon (1977), the respondents were instructed to perform the ranking task and answer the entire questionnaire at their own pace. This was done to maintain a realistic choice environment. When buying houses, consumers typically do not make decisions under time pressure (Malhotra 1979). Moreover, evidence suggests that biased and less accurate information processing may result under time constraints (Wright and Kriewall 1980). Wright (1974) and Wright and Weitz (1977) found that subjects focused on fewer cues and overweighted negative evidence when the allocated time was decreased and the amount of processable data was held constant. Subjects also tended to overweight negative evidence when the amount of processable data was increased and allocated time was held constant (Scott and Wright 1976; Wright 1979).' DATA ANALYSIS The occurrence of information overload was examined using four different types of measures: a self-report on information overload, a correct-choice measure based on optimizing criteria, a correct-choice measure based on satisficing criteria, and measures of subjective psychological states. Following Jacoby, Speller, and Berning (1974) and Jacoby, Speller, and Kohn (1974), under the optimizing criteria, the respondents made correct choices if they chose

their best alternative. The best alternative was defined as the one which came closest to the individual's ideal alternative. To identify the best alternative, Euclidean distances between the ideal alternative and the alternatives (houses) in the choice set were computed. The satisficing measure 'In addition, the time taken by the respondents to perform the ranking task was not measured. Given the nature of the interviewing process and the facilities available, it was not feasible to make this measurement without making the subjects conscious of it. Moreover, such a measurement was not deemed necessary, as the focus in the present study was on decision performance in terms of making correct or best choices. Although Jacoby, Speller, and Berning (1974) did measure performance speed, they did not relate this variable to choice accuracy. Nevertheless, it is recognized that measurement of response time could provide additional insights in future investigations. This content downloaded from 203.145.159.148 on Wed, 2 Apr 2014 00:27:45 AM All use subject to JSTOR Terms and Conditions422 THE JOURNAL OF CONSUMER RESEARCH TABLE 1 NUMBER OF RESPONDENTS MAKING CORRECT CHOICESa Number of alternatives Number of attributes 5 10 15 20 25 Optimizing measure 5 10 7 10 10 5 10 10 6 9 6 5 15 8 6 4 5 6 20 8 6 3 3 2 25 6 4 3 5 4

Satisficing measure 5 12 10 11 10 8 10 12 7 12 9 9 15 9 9 5 6 7 20 10 7 6 6 3 25 8 7 6 5 6 Self-report measure 5 12 12 12 12 9 10 9 10 12 11 9 15 12 9 9 8 8 20 11 8 10 8 8 25 11 6 6 6 6 aBase is 12 in each cell. was operationalized by defining a correct choice as an alternative that was either closest or second-closest to the ideal alternative. The number of respondents (out of 12 in each cell) who made correct choices under each of the three measures is shown in Table 1. Model Formulation and Testing The occurrence of information overload was investigated by examining the dysfunctional consequences across the different treatment conditions. Where a particular treatment condition does result in information overload, the proportion of respondents making correct choices as determined by the optimizing and satisficing criteria, as well as the proportion of respondents not reporting information overload, would decrease. Hence, a LOGIT framework was

adopted to assess the probabilities of correct choice and of no information overload across the different treatment conditions (Cox 1975). Given the binary nature of the dependent variables, the LOGIT approach becomes particularly appropriate.2 Several different models were formulated and statistically tested. Main Effects Plus Interactions Model A model for the probability of correct choice or no information overload, which incorporates the treatment main effects as well as all interactions, is: / p\ ~~25 Log, ( i') = E 3X, i (1) where Pi = probability of correct choice or no information overload in cell i (i, i = 1, 2, . . ., 25); Xi = 1; X2 = 1 if the number of alternatives in the choice set is 10, 0 otherwise; X3 = 1 if the number of alternatives in the choice set is 15, 0 otherwise; X4 = 1 if the number of alternatives in the choice set is 20, 0 otherwise; Xs = 1 if the number of alternatives in the choice set is 25, 0 otherwise; X6 = 1 if the number of attributes for which information is provided is 10, 0 otherwise; X7 = 1 if the number of attributes for which informa-

tion is provided is 15, 0 otherwise; X8 = 1 if the number of attributes for which information is provided is 20, 0 otherwise; X9 = 1 if the number of attributes on which information is provided is 25, 0 otherwise; X1O to X25 = interaction terms. In Equation 1, X1 is constant, X2 to X5 represent the main effects for the number of alternatives, and X6 to X9 represent the main effects for the number of attributes. This model was estimated for the optimizing, satisficing, and self-report results of Table 1. The main effects plus all interaction formulation (Equation 1) is a fully saturated model in the sense that it employs 25 parameters to estimate the 25 cell probabilities. Hence, the probabilities estimated by the model were exactly the same as the observed probabilities. Main Effects Model To examine whether the interaction effects were significant and a simpler main-effects formulation than Equation 1 would adequately describe the observed data, the following model was posed: Log, ( p')= Xi (2) The symbols in this formulation have the same meaning as in Equation 1. The significance of the interaction terms was examined 2Cox (1975) has discussed the basic assumptions underlying the LOGIT and has shown that this framework offers certain advantages for analyzing binary response variables as compared to alternative approaches, including

log-linear models. A detailed discussion of the propriety of the LOGIT methodology for analyzing the information-load paradigm is provided by Malhotra (1979) and Malhotra, Jain, and Lagakos (forthcoming). This content downloaded from 203.145.159.148 on Wed, 2 Apr 2014 00:27:45 AM All use subject to JSTOR Terms and ConditionsINFORMATION LOAD AND DECISION MAKING 423 TABLE 2 RESULTS OF THE MAIN EFFECTS MODEL Dependent variable Estimated probability Self- Cellb SelfParameter Optimizing Satisficing report number Optimizing Satisficing report 1 79a 2.91 a 4.22a 1 0.86 0.95 0.99 52 -0.98a -1.12a _1.40a 2 0.69 0.86 0.94 33 _ 0.98a -1.12 a -0.96 3 0.69 0.86 0.96 4 -0.98a -1 .44a -1 .40a 4 0.69 0.81 0.94 5 -1 .50a -1 .67a -1 .85a 5 0.57 0.78 0.91 6 --0.46 - 0.25 -1.24 6 0.78 0.93 0.95 7 - 0.96a -1 .39a -1 .80a 7 0.58 0.82 0.83 -1 .47a -1 .68a -1 g9a 8 0.58 0.82 0.88 9Cg -1.47a _1.68a _2.71 a 9 0.58 0.77 0.83 10 0.46 0.73 0.76 11 0.70 0.82 0.92 12 0.46 0.60 0.73 13 0.46 0.60 0.81 14 0.46 0.52 0.73 15 0.34 0.46 0.64 16 0.58 0.77 0.91 17 0.34 0.53 0.72

18 0.34 0.53 0.80 19 0.34 0.45 0.72 20 0.23 0.39 0.61 21 0.57 0.77 0.82 22 0.34 0.53 0.53 23 0.34 0.53 0.63 24 0.34 0.45 0.53 25 0.23 0.39 0.41 aSignificant at the 0.05 level. bThe 25 cells of Table 1 have been numbered serially,from left to right and from top to bottom. by the likelihood ratio test (Mendenhall and Scheaffer 1973), performed separately for the self-report, optimizing, and satisficing measure of correct choice. The interactions were not found to be significant for any of the measures. This lack of interactions suggested that the main-effects model (Equation 2) was appropriate for analyzing the effects of information load. Furthermore, this model provides a good fit to the observed data. Chi-square tests of homogeneity between the observed and the predicted number of people making correct choices or not reporting information overload were not significant. The results of estimating Equation 2 using the three alternative measures of the dependent variable are given in Table 2. It can be seen that, in terms of the sign and significance of the estimated parameters, the results for optimizing and satisficing measures are identical. The parameters ~2, , I:4, and ^, indexing the effect of the number of

alternatives, are all negative and significant at the 0.05 level. Thus, the probability of correct choice decreases significantly as the number of alternatives in the choice set increase from five to ten, 15, 20, or 25. The parameters indexing the numbers of attributes on which information is provided are also all negative. Moreover, I7, P8' and 9 are significant at the 0.05 level. Hence, the probability of correct choice decreases significantly as the number of attributes on which information is provided increases from five to 15, 20, or 25. However, the probability of correct choice does not decrease significantly as the number of attributes on which information is provided increases from five to ten. The results for the self-report measure are similar to those for the two correct-choice measures, except that ' is not significant, although it, too, is negative. A Parsimonious Model In order to map the shape of the information-load curve, further tests for the significance of differences between the estimated parameters were conducted. These tests indicated that I2, I3, I4, and I5 were not significantly different from each other. Likewise, I7, I8, and I9 were also not significantly different from each other for self-report, as well as the two correct-choice measures. These findings motivated the use of the following more parsimonious formulation to model the data of Table 1:

Log, ( _p) E X,(3) where: Pi = the probability of no information load in cell i (i, i = 1, 2, . . ., 25), This content downloaded from 203.145.159.148 on Wed, 2 Apr 2014 00:27:45 AM All use subject to JSTOR Terms and Conditions424 THE JOURNAL OF CONSUMER RESEARCH TABLE 3 RESULTS OF THE PARSIMONIOUS (THREE-PARAMETER) MODEL Dependent variable Estimated probabiiity Self- Cellb SelfParameter Optimizing Satisficing report number Optimizing Satisficing report Al 1.53a 2.76a 3.40a 1 0.82 0.94 0.97 -1.09a -1.33a - 1.38a 2 0.61 0.81 0.88 3 - 1.04a - 1.44a -1.38a 3 0.61 0.81 0.88 4 0.61 0.81 0.88 5 0.61 0.81 0.88 6 0.82 0.94 0.97 7 0.61 0.81 0.88 8 0.61 0.81 0.88 9 0.61 0.81 0.88 10 0.61 0.81 0.88 11 0.62 0.79 0.88 12 0.35 0.50 0.65 13 0.35 0.50 0.65 14 0.35 0.50 0.65 15 0.35 0.50 0.65 16 0.62 0.79 0.88

17 0.35 0.50 0.65 18 0.35 0.50 0.65 19 0.35 0.50 0.65 20 0.35 0.50 0.65 21 0.62 0.79 0.88 22 0.35 0.50 0.65 23 0.35 0.50 0.65 24 0.35 0.50 0.65 25 0.35 0.50 0.65 'Significant at the 0.05 level. bThe 25 cells of Table 1 have been numbered sefially from left to right and from top to bottom. X = 1, X2 = 1 if the number of alternatives in the choice set is 10 or more, 0 otherwise; X3 = I if the number of attributes on which information is provided is 15 or more, 0 otherwise. The results (Table 3) also provide a good fit to the observed data, as indicated by the chi-square tests of homogeneity. It can be seen that similar results are obtained for all three measures of the dependent variable. Note that 2 and 3 are negative and significant. Thus, the probability of correct choice or no information overload decreased significantly as the number of alternatives in the choice set was increased from five to ten or more. Moreover, this probability remained more or less constant as the number of alternatives was varied from ten to 25. The results further show that the probability of correct choice or no information

overload remained fairly constant for five or ten attributes, but decreased significantly when the number of attributes increased to 15, 20, or 25. Thus, in this study, respondents experienced information overload when they were provided with ten or more alternatives in the choice set or with information on 15 or more attributes. The Effect of Stimulus and Individual Variables Summers (1974) has suggested that, when investigating the information-load paradigm, explicit account should be taken of the importance of the information presented and the variability in the relative attractiveness of competing alternatives across treatment cells. The variability in the relative attractiveness of the alternatives in the choice set was operationalized in terms of the standard deviation of the Euclidean distances of the alternatives in the choice set from the respondent's ideal alternative. These two variables, along with cognitive complexity, were introduced as covariates in the main-effects model (Equation 2) to yield: ( PikP) = 1 lik (4) + f11CCSik + P12Aik' where, Pik = the probability of correct choice or no information overload for individual k in cell i, (i, i = 1, 2, . . ., 25); This content downloaded from 203.145.159.148 on Wed, 2 Apr 2014 00:27:45 AM