Effects of Information Load on Capital Budgeting Decisions.

This study examined information load effects on information-processing behavior for 36 experienced and 48 inexperienced capital budgeters. Six capital investment choice scenarios were sequentially presented to each participant using a computerized process-tracing methodology. The amount of information attending each of the six choice tasks was randomly varied and indicators of the information search strategy employed were traced.This is an extension of the information load effect to the capital budgeting domain. Results from this study are three-fold. First, consistent with related research, capital budgeters reduce the proportion of information searched and increase the variability in their search patterns as the information load increases. Second, contrary to prior research, our results suggest some adjustments to previous evidence demonstrating an effect of information load on the direction of search patterns. Finally, although information load interacts somewhat with an individual's level of experience, the results did not clearly confirm that capital budgeting experience affects information search processes.