Organizational Behavior and Human Decision Processes

Recent advances in information technology make it possible for decision makers to track information in real-time and obtain frequent feedback on their decisions. From a normative sense, an increase in the frequency of feedback and the ability to make changes should lead to enhanced performance as decision makers are able to respond more quickly to changes in the environment and see the consequences of their actions. At the same time, there is reason to believe that more frequent feedback can sometimes lead to declines in performance. Across four inventory management experiments, we find that in environments characterized by random noise more frequent feedback on previous decisions leads to declines in performance. Receiving more frequent feedback leads to excessive focus on and more systematic processing of more recent data as well as a failure to adequately compare information across multiple time periods. These results suggest that caution be used in the design and implementation of real-time information systems. 2008 Elsevier Inc. All rights reserved. Recent advances in information technology have dramatically increased the speed at which information is delivered to decision makers and the speed with which decisions can be made. Examples include real-time stock quotes and the opportunity for investors to change their portfolios on a daily or hourly basis, constant updates on competitors’ prices and the ability of marketers to rapidly match or beat these prices, and frequent updates on product demand and the possibility for managers to immediately change product order quantities in response. From a normative sense, an increase in the frequency of feedback and the ability to make changes should enhance performance as decision makers are able to quickly respond to changes in the environment and see the consequences of their actions. Many believe that fast reactions to information are crucial to success. This belief has motivated large investments in technologies that provide real-time information to decision makers. However, given that people often adapt their decision-making processes to the information environment (Payne, Bettman, & Johnson, 1988), more frequent feedback may degrade performance if it leads decision ll rights reserved. ioral Research in Operations l Research in Management ke, Georgia State, and the