Aversion to Loss and Information Overload: An Experimental Investigation

The negative consequences of information overload are well understood across a range of disciplines even though the causative factors that contribute to it have not been coherently researched. We apply the concept of ‘aversion to loss’ from prospect theory and explore its effects in the context of information processing for decision making. A controlled laboratory experiment was performed to test the hypothesis that humans acquire and process relatively more information under the threat of information unavailability. Our results indicate strong support for the hypothesis. Further, we show that despite processing more information, people are less satisfied with their decisions than those who have free and continuous access to information. Implications and extensions of the study are presented.