Can Information Be Too Much? Information Source Selection and Beliefs

Agents undertaking economic decisions are exposed to an ever-increasing amount of information sources, especially nowadays in what has been defined as the Information Age. This paper investigates how the number of available information sources impacts agents’ ability to (i) select reliable sources and (ii) use their content effectively to update their beliefs. To answer these questions, I set up an online experiment informed by a simple automata decision-making and belief-updating model. Participants’ source selection performances deteriorate as the number of available sources increases. Also, ceteris paribus, their performance in updating their beliefs using the selected sources worsens, showing a trade-off between source selection and belief updating performances. These results may help to guide policy-making decisions, providing evidence on externalities of information production.