Photo: i_yudai
The conclusion of a book I read this year resonated with me, and since completion I have noticed it keeps popping up in my life – that sometimes more options can have a negative effect on a decision. The Paradox of Choice: Why More Is Less by Barry Schwartz argues that if you have three choices, the consequences of adding a fourth choice will outweigh the utility of another option.
How can this be? This fourth option may be better than the other three, and if it is not, then it can simply be disregarded and you are back at three choices. Yes, that is a logical conclusion, but humans are not perfectly rational. First, this additional option will require further effort on your part to compare it to the others – if the choices are all very similar this can be excruciatingly difficult. More importantly, additional options provide the opportunity to second guess your decision. Schwartz illustrates in the book that the doubt in your mind introduced by more options will result in you being less content with the outcome.
The Jam Study
Two psychologists put this hypothesis to the test to find out if more choices can have negative effects on the decision. One study they ran was to setup a table of jam samples at a grocery store – sometimes they displayed 6 flavors and other times 24. While they found that more choices of jam incited a greater number of shoppers to sample, they were ten times more likely to buy with less choices and “reported greater subsequent satisfaction with their selections.”
The Paralysis of Analysis
The book lumps individuals into two categories: those who want the absolute best, and those who are happy with the first option that meets their requirements. Can you guess which group is happier with their outcome? Even if the perfectionist chooses a marginally better jam, they still are not as satisfied with their choice and have wasted a great deal of time.
Investing is a great example of this principle – we all know we are supposed to invest our money as early as possible to take advantage of the miracle of compound interest. But we also know that a 9% return is a whole lot better than 5%. If possible we should strive for 9%. Before we realize what has happened, the paralysis of analysis has taken hold, we have stalled looking for the perfect safe place to invest our money, and we are 45 without any investments. Just pick the first good investment that comes your way (there will always be better, no matter how much time you put into it), pick it now, and be happy!
Flipping Radio Stations
The findings of this book correspond to beliefs I already held – if you are happy with the first option, why go on looking at other options? This conviction is exemplified by the way I flip through the preset radio stations in my car. Some people prefer to briefly try out all the radio stations before deciding which song they want to listen to most. If station A is playing their second favorite song, they will still flip through the others to find out if their absolute favorite is playing.
I take the other approach – if station A is playing a song that I enjoy I will stop there. I don’t flip through to find out if there is a song I like more on another station. My reasoning is simple: when I first start listening to the song it is new and exciting. If I check out 4 other stations before coming back the same song, it doesn’t hold the same allure it once did. I don’t have to know that it is the absolute best option available.
Ordering in a Restaurant
An unexpected corollary to being vegetarian is that it is much easier to order food at a restaurant. While all the dinner guests are scratching their heads trying to figure out what they want to eat from the plethora of options, I simply take a look at the 1-3 vegetarian dishes. I have a self-erected mental shield to keep the additional options away. The outcome is that I don’t have any second guessing at the end of the meal – if the food was poor, it is simply the fault of the restaurant – I don’t have the self-doubt or regrets that are inherent to a bad outcome despite many choices.
Of course having some options are necessary, and the optimal number of choices varies according to the severity of the decision (thus the intro example of adding a 4th choice isn’t so cut and dry). It is an interesting principal to watch for through the course of your decisions. What are some examples that you encounter in your everyday life? Do you agree that a multitude of options will lead to second-guessing your decision more than if you had less choices?
Steve Jobs is the king of this. He took over Apple (for the second time) and saw a huge amount of options for computers, none of which were all that different. It was confusing. What did he do? Came out with the iMac. One option, maybe one or two sub-options at most. Then the iPod – one option. Then the iPhone – one option, max three (and it’s clear which one is the primary option).
Probably why I ended up getting an iphone to replace technodanceparty – I couldn’t figure out which of the 1000 droid phones I wanted, but I knew the iPhone was an interesting option.
By the way – wal mart and other retailers have already figured this out and have started pruning SKU’s. Sucks for suppliers who don’t get on the short list, great for those who do. but is this good for our society – increased commoditization and standardization? Hell of deep thoughts bro.
I agree – Steve Jobs knows this principle like the back of his hand. He gives just enough variety (all within the same product) so that you think “which size ipod should I buy?” rather than “should I buy an ipod?”. You have just enough things to compare withing Apple’s product line that you don’t feel the need to compare other competitors products.
The whole Wal-Mart thing is very interesting as well. Essentially they can decide which products survive and which ones don’t by only selling products that are either selling for the cheapest or are an established brand. As a distributor should they be expected to treat all companies that want to sell in Wal-Mart the same way? Or are they allowed to play favorites to maximize their profit?
There are similarities here to the late 19th century where the railroads were the way of distribution for products. They had elaborate rebate setups to lower the shipping rate for the companies that shipped the most – makes sense. BUT this meant smaller companies couldn’t compete because they couldn’t get the same deal with the railroads. BAM, ruled illegal by the Sherman Act. Is it the same for Wal-Mart, creating an environment where the little guys can’t compete? OR, is this off base because there are plenty of other distribute methods available today, namely the internet?
Fewer choices means I spend less time and money at Walmart because I can’t find what I want! Duh!