Friday, February 11, 2005

Prospect theory and cognitive authority

I recently had a meeting where someone of importance stressed that: “information has to flow to the bottom line.” This individual deals purely in information products that allow the company’s clients to save money. At the time I nodded and responded with those words that I had learned while working in the software industry. I talked about the importance of the customer and the importance of the value proposition. And I believed it. I still do to a certain extent but there’s a train of thought going through my head that is crowding other things out so I had better exorcize it.

Information has to flow to the bottom line

I agree. But there’s one something between the information—or the document that contains that information—and the bottom line of the corporation: the user/reader (I’m being careful not to create a mythical and idealized “user”). The only problem is that the user/reader probably really doesn’t care about the bottom line. As noted by Kahneman and Tversky’s prospect theory, individual behaviour is far from rational from an economic perspective. People make decisions based on all sorts of biases rather than just the utility dictated by the information available to them. This nature of user/reader behaviour becomes important when we consider that they will be the ones making the decision to continue purchasing those information products that are supposed to flow to the bottom line.

Instead of utility, the user/reader will rely on the cognitive authority of the information to make that repurchase decision. As noted by Patrick Wilson, all information is hearsay unless individuals have a reason to consider it otherwise. I suppose this all gets us back to those dreaded bibliographic objectives of accuracy, currency, and authority. Of course, authority will necessarily require establishing cognitive authority likely through demonstrating some knowledge of the user/reader’s concerns and perhaps by understanding the pressure that exists on their bottom line…

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