Is there such a thing as too much information for 401(k) participants?

I started to think about that question after reading Jonah Leher’s post, Don’t Read the Business Page, on The Frontal Lobe Blog. Mr. Leher tells us to ignore the mass media coverage about the stock market and the growing liquidity coverage because it’s too much information.
He writes about the experiment that Harvard psychologist Paul Andreassen conducted on MIT business students in the late 1980s. After having the students select a stock portfolio, he divided them into two groups. The first group could only see the changes in the prices of their stocks. The second group had access to a continual flow of information from various sources.

You know what’s coming. The first group – the “less information” group did significantly better than the second group – the “high information” group. Exposure to too much information was distracting. Andreassen was surprised with the result when he did the experiment in the later ’80s, but most of us shouldn’t be now. Back then, there was wasn’t the constant flow of information – good and bad – bombarding us 24/7/365 from a multitude of sources. 

So what does that have to do with 401(k) plans? The Pension Protection Act of 2006 mandates additional disclosures to 401(k) participants for such new provisions as automatic enrollments and qualified default investment funds. More is on the way in the form of required disclosures regarding plan fees either in the form of Department of Labor regulations or by legislation.

No one disputes that participants should be provided with sufficient information in order to make informed decisions about their retirement funds. The question is how much information is enough information? Let’s not turn 401(k) participants into a "high information group".