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The Effects of Perceptual Grouping on Text Entry Performance (18 Feb 2004)
Given what is known about speed/accuracy tradeoffs in human performance, one way to improve performance on soft keyboards is to increase the size of the keys. However, size constraints of mobile computing devices prevent this option. Alternatively, placing multiple letters on a single key reduces the number of keys required and minimizes the space required. However, this study suggests that grouping letters onto a single-key may decrease transcription performance due to additional perceptual processing steps despite a four-fold increase in target size.
Article URL: http://psychology.wichita.edu/surl/usabilitynews/61/perceptual_grouping.htm

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