THE BUSINESS VALUE EFFECTS OF COGNITIVE BIASES IN TRADING WORKSTATION WINDOW DESIGN

Abstract

Recent research on information technology (IT) value has focused on examining new theoretical bases from which to construct robust valuation methods and models. This paper considers two literatures which previously have not been explored in this context: research on behavioral decision making and information presentation effects. We begin by identifying a typology of potential cognitive biases and heuristics which may enhance or suppress IT value when workstations are used to provide decision support. To illustrate, we examine how these effects may become operative in screen-based securities and foreign exchange trading activities, where designers can choose among information presentation formats which support trader decision making. We adapt a recent model by Kroeck, Kirs and Fiedler (1989) to identify where and how information effects, heuristics and biases come into play in the trading environment. Our investigation concludes that managerial recognition of the potential value tradeoffs associated with alternative trading workstation window designs is an important concern for fine-tuning trading decision support systems. In this way, the "business value linkage" between trading workstation investments and the returns they provide can be more fully understood.