This research examined the effects of hands-free cell phone conversations on simulated driving. The authors found that these conversations impaired driver's reactions to vehicles braking in front of them. The authors assessed whether this impairment could be attributed to a withdrawal of attention from the visual scene, yielding a form of inattention blindness.
Cell phone-induced failures of visual attention during simulated driving. Strayer, David L.; Drews, Frank A.; Johnston, William A. Journal of Experimental Psychology: Applied, Vol 9(1), Mar 2003, 23-32.
http://psycnet.apa.org/journals/xap/9/1/23/
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Summary: We used a high-fidelity driving simulator to compare the performance of cell-phone drivers with drivers who were legally intoxicated from ethanol. When drivers were conversing on either a hand-held or hands-free cell-phone, their reactions were sluggish and they attempted to compensate by driving slower and increasing the following distance from the vehicle immediately in front of them. By contrast, when drivers were legally intoxicated they exhibited a more aggressive driving style, following closer to the vehicle immediately in front of them and applying more force while braking. When controlling for driving difficulty and time on task, cell-phone drivers exhibited greater impairment than intoxicated drivers.
Fatal Distraction? A comparison of the cell-phone driver and the drunk driver. David L. Strayer, Frank A. Drews, and Dennis J. Crouch. Proceedings of the Second International Driving Symposium on Human Factors in Driver Assessment, Training and Vehicle Design.