Abstract
Consumer information-processing theory provides a useful framework for policy makers concerned with regulating information provided by managed care organizations. The assumption that consumers are rational information processors and providing more information is better is questioned in this paper. Consumer research demonstrates that when faced with an uncertain decision, consumers adopt simplifying strategies leading to sub-optimal choices. A discussion on how consumers process risk information and the effects of various informational formats on decision outcomes is provided. Categorization theory is used to propose guidelines with regard to providing effective information to consumers choosing among competing managed care plans. Public policy implications borne out of consumer information-processing theory conclude the article.