Is Timely Information Always Better? The Effect of Feedback Frequency on Decision Making
Posted: 24 May 2008
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.
Keywords: Information Frequency, Feedback, Decision Making, Newsvendor Problem, Performance
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