Over 500,000 people visited Farnam Street last month to learn how to make better decisions, create new ideas, and avoid stupid errors. With more than 100,000 subscribers to our popular weekly digest, we've become an online intellectual hub. To learn more about what we do, start here.

Too Much Information Clouds Judgment

What was the effect of the useless information on negotiation?

To find out, Neale and Wiltermuth asked participants to represent two companies in a merger and negotiate several issues, such as which firm's CEO would head the new company and where that company's headquarters would locate. People who had read the irrelevant, distracting statements, it turned out, were far less accurate in identifying the issues that were least important to their partners — the very issues that offer opportunities to enlarge the size of the pie. Specifically, participants with useless information could identify these issues only 14% of the time and fared worse than even people who had no information at all (who correctly identified the issues 26% of the time).

A follow-up experiment revealed why negotiators with irrelevant information did worse. What the researchers found, Neale says, was not that people weren't exchanging valuable information. “It was that people were not paying attention to this information in front of them.” And because they ignored useful information, they created vastly less value than participants who didn't have this useless information. The participants with useless information were also more likely to reach an impasse and fail to reach an agreement at all.

These results, published in the Journal of Applied Psychology, should give pause to anyone who negotiates in the real world, which includes most of us. For one thing, the research suggests why negotiations between friends or other people who know each other well aren't as likely to create value. “Because I think I know you well, I'm not going to be as attuned to the specifics of the negotiation,” Neale says. “I'm going to think I know what you care about, but I don't test out those hypotheses.”

What's more, the easy availability of information about others — think of LinkedIn profiles, Facebook pages, and Twitter feeds, for example — can lull us into a false sense of confidence even about strangers. That's not to say that such information is always irrelevant, but since we're poor at telling the useful from the useless, looking at social media for insights about our negotiation partners can harm us by shifting our focus from what's truly important in the negotiation. “We feel like we've done our homework,” Neale says, “but we don't know the issues.”


Related: Do seductive details interfere with your comprehension?