“The waiter handed us five enormous sheets and began to explain it all—this was the wine list, this was the appetizer list..we were used to little New York bistros with one-page menus, and we just looked at each other like, ‘This is too much thinking.”
Mike Shor
It started with a menu, or more to the point, several menu`s in Nashville.
And that led Mike Shor, who specialises in Game Theory, Experimental Economics as well as Microeconomic Theory to consider that if he, as an economist could be so easily overwhelmed, then average punters must also be confused.
At that stage, there were many researchers involved in classic economic theory who espoused the notion that more options are better.
Which was opposite what many traditional psychologists were saying.
The standard economic view at that time was that someone given 50 options, is better off than someone given five, especially if the five are contained in the 50.
Psychological studies, on the other hand, point to what amounts to option fatigue, commonly known as information overload—like Shor in the Nashville restaurant, people get overwhelmed.
Reducing Choice Overload without Reducing Choices reducing decision quality.
Source
We have to also define the word “information” which at first glance appears to be easy.
I have just been told that the moon is made out of cheese, or that it is better to invest in old properties in Sydney right now.
My uncle has told me these things !
“facts provided or learned about something or someone”
So we expand on the word “facts”.
“a thing that is known or proved to be true.”
So, based on the word facts, neither my flippant comment on the moon or even about investing in old properties in Sydney right now qualify as facts.
Expanding on the word facts I found this ..”information used as evidence or as part of a report or news article.”
Now we are slightly mudding the waters, and for good reason as we will explain.
Because we can arrive at a paradox since now a “fact” can be real if it is part of a news article.
Essentially, if its in the news, it can be a fact and that means it can be classified as information.
Fake news anyone ?
And what our staff are finding at Ample Property Solutions are several problems related to Information.
Which can obviously lead to a set of poor choices.
Just because someone provided you with some information about anything, especially investing in property, doesn’t make it a fact.
And, just because someone conveyed to you some information, through an article they wrote or quoted doesn’t mean its a fact either.
Yet we are finding large numbers of investors who are often confused by information they have taken on board, which is often conflicting.
And then the information becomes a rigid fact in their mind.
As a recent example clearly demonstrated, we had a client come into our offices and he had access to a large amount of capital.
Yet he was fixated on investing in a new property in Sydney, and cognitive dissonance made it slightly difficult to initially explain to him why at this stage, our advise would not suggest going down this route.
Also important in the use of information is the investor’s level of financial knowledge.
That is, knowledge which is directly relevant to the investment process.
For many people, financial security depends on making the right financial decisions now for their future.
Yet, there is growing evidence that far too many individuals make poor decisions, and many cannot be described as making any real decisions at all.
While some investors will suffer from too little information, others are burdened by way too much.
A lack of information, is “underload” a word ? could also have similar bad consequences.
Providing people with information about investment options, may not be enough to produce rational and sound decisions.
Investment information has to be concise without being overwhelming and it needs to be “easily” implemented.
The two main causes of information overload are too many options, and possible similarity of options.
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Let us show you how to build a high-performing investment property portfolio and build a better future for your family.
Contact us to discuss today.
Or, you might be interested in our next FREE Property Investment Seminar ‘Market Changes & Property Buyer Concerns’ in Burwood on Wednesday 31st of May 7PM bookings essential.