Information Saturation

(insert drawing here)

The internet is an amazing way to get new information however, as we have probably seen, the amount of information you gain from your research plateaus in after sometime. In microeconomics, it is called the “Economics of Information”.  This is the study of how information affects the way that we make economic decisions. This is an indepth study, however, the aim of this article is to explore how getting a lot of information overtime does not help us in the long run.

The graph shown in figure 1 shows the information as the source of value (on the x axis) and the amount of usefullness derived from the the information that one gets. It shows that overtime, the amount of information you gain from information you absorbs plateaus. This logic applies to most fields.

An example that stands out to me is what happens when I try to analyse the company I want to invest in. This is what usually happens:

    I look for information about the company I am interested in. I feel frustrated because sometimes I do not find the information I feel I need to make an informed decision.
    I read the company sheets. At this stage, I read and analyse the financial sheets and try to look for red flags. There is a feeling of elation as I have overcome procrastination. My knowledge of the companies that I am trying to compare increases.
    I read about management
    I read about the ways in which the company is being more socially and environmentally responsible. As it is a requirement.

It’s like discovering gold. One person discovers a deposit and decides that this is the place where they might develop a mine. They start drilling and drilling. And the more they drill into the ground, the more they discover information about the gold deposit they have underneath the ground.

Likening information to gold is not a mistake. It is also valuable to us as humans. In a less vain way, I think. But still more valuable as it will reign even as gold depletes.

There are moments where no matter how much you try,

An example that stands out to me is during the exploration of gold. A person suspects that he has gold in area A based on the having sites around them. They start exploring and to gauge the amount of gold they have in their section, they use information they get from the area around them. The sections closest to them highly influences the results that one gets. The further one moves from area A, the less other information will influence the characteristics of area A. There are several stages to this.

Stage 1

At this stage, there is a lot of information about the subject. At this point, as we get more information, the knowledge about the subject increases. There is an feeling of awe as the secrets of your subjects are revealed.

Stage 2

You still have a lot of information to go through. You analyse all of it, however, there is the yield of information that is derived from the information decreases as you go on.

Stage 3

At this stage. The further analysis you do, affects nothing and no matter how far and deeper you get, there is no new information. In fact, what may happen is a decrease in information because of the confusion and anxiety. There is also a feeling of helplessness associated with being unable to form decisions due to information overload.

This is more on knowing where to stop. There is sometimes no way to be but to be adaptable. It is more on learning to work with what we are given without feeling agitated.


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