Book excerpt from Gerd Gigerenzer's Gut Feelings: The Intelligence of the Unconscious is cross posted from http://www.arijitbanik.com/
...Economists make an exception when information is not free: more information is always better unless the costs of acquiring further information surpass the expected gains. My point, however, is stronger. Even when information is free, situations exist where more information is detrimental. More memory is not always better. More time is not always better. More insider knowledge may help to explain yesterday’s market by hindsight, but not to predict the market of tomorrow. Less is truly more under the following conditions:
A beneficial degree of ignorance. As illustrated by the recognition heuristic, the gut feeling can outperform a considerable amount of knowledge and information.
Unconscious motor skills. The gut feelings of trained experts are based on unconscious skills whose execution can be impeded by over deliberation.
Cognitive limitations. Our brains seem to have built-in mechanisms, such as forgetting and starting small, that protect us from some of the dangers of possessing too much information. Without cognitive limitations, we would not function as intelligently as we do.
The freedom-of-choice paradox. The more options one has, the more possibilities for experiencing conflict arise, and the more difficult it becomes to compare the options. There is a point where more options, products, and choices hurt both seller and consumer.
The benefits of simplicity. In an uncertain world, simple rules of thumb can predict complex phenomena as well as or better than complex rules do.
Information costs. As in the case of the pediatric staff at the teaching hospital, extracting too much information can harm a patient. Similarly, at the workplace or in relationships, being overly curious can destroy trust.
Note that the first five items are genuine cases of less is more. Even if the layperson gained more information or the expert more time, or our memory retained all sensory information, or the company produced more varieties, all at no extra cost, they would still be worse off across the board. The last case is a trade-off in which it is the costs of further search that make less information the better choice. The little boy was hurt by the continuing diagnostic procedures, that is, by the physical and mental costs of search, not by the resulting information.
Good intuitions ignore information. Gut feelings spring from rules of thumb that extract only a few pieces of information from a complex environment, such as a recognized name or whether the angle of gaze is constant, and ignore the rest. How does this work, exactly?
Gerd Gigerenzer, Gut Feelings: The Intelligence of the Unconscious, (New York: Viking Penguin, 2007), 37-39.