More or Less. The Paradox of Choice

      More or Less. The Paradox of Choice

      Barry Schwartz, in his acclaimed book Paradox of Choice and his Ted Talk on the topic, lays out the premise that offering too many choices could be self-defeating.

      I’ll quote Schwartz directly:

      Paralysis is the consequence of having too many choices. If you really want to get the decision right, it’s for all eternity, right? You don’t want to pick the wrong mutual fund, or even the wrong salad dressing?

      Making the wrong choice

      Well, let me say right off the bat, I’ve picked many wrong salad dressings. Purposely. I like to treat my taste buds to something fresh and interesting. Will my taste buds find favor with the flavor? Heck, I won’t know until I try! To stick to the tried and true leads to yawns at the dinner table. And, left over salad.

      Too many options?

      Putting aside my preferences, the question of options has vast implication across many B2C and B2B industries. Does P&G gain by offering the lady walking down the aisle six different detergents? Does she have the time, or even the desire to stand there and read all the package copy to decide which is the right detergent to buy?

      You could pose this question to a slew of package and hard goods manufacturers, even service providers. Do decision makers, as Schwartz states, freeze when given too many options?

      What research says about too many choices

      This question has been meticulously researched. As an example, a research paper in the Journal of Consumer Research reported:

      In another study, Lyengar and Lepper (2000) offered participants a choice between an array of either six or 30 exotic chocolates. Participants who chose from the 30 options experienced the choice as more enjoyable but also as more difficult and frustrating. Most intriguingly, though, participants facing the large assortment reported less satisfaction with the chocolates they finally chose than those selecting from the small assortment (5.5 vs. 6.3 on a 7-point Likertscale). Moreover, at the end of the experiment, only 12%of the participants in the large assortment condition accepted a box of chocolates instead of money as compensation for their participation, compared to 48% in the small assortment condition. This suggests that facing too many attractive options to choose from ultimately decreases the motivation to choose any of them.

      What the above reveals is that there is a tradeoff for choice. With too many choices we are disconcerted by the possibility that there was a better choice to be made, the infamous “buyer’s remorse.”  I “coulda” “shoulda” bought the other one. 

      Also, the effort involved to reach a decision is time consuming and stressful.  So, we’re left with discomfort and uncertainty that precludes true satisfaction.

      The newspaper test

      Joe Sugarman, the uber marketer, tells of the time his client, a watch manufacturer, wanted to run one direct response ad in a newspaper displaying their 18 different styles. Sugarman emphatically disagreed, demanding they only show one style, insisting too many choices will decrease rather than increase sales. Unable to each accordance, the compromise was to test each strategy, running separate ads for each strategy.

      Sales Sugarman’s ad of only one style put the sales from the other ad to shame. Too many choices require too much effort, leading to doubt, leading to hesitation, leading to “I’ll pass on this.”

      If it gets the job done

      With all due respect to Sugarman and ignoring my preference for choices with salad dressing, here’s a side note to P&G, I’ll settle for only one detergent, as long as it gets the job done—and folds my laundry.  Okay, that’s a personal issue, but mutual funds are a logical one. Mutual funds are complex, with a variety of industry funds to invest in, and fee structures whose complexity make E=MC2 pale in comparison. With earned money at stake, perhaps even retirement money, who wouldn’t want to take the time and effort to review their options?

      And, if I’m running a company in a very competitive industry, which is the case with most companies, I would want the big picture with all my strategic options. Yes, it would require mass effort on the part of my teams to do all the research, gather all the information and data, and put together a strategically sound presentation of all the options. And yes, the decision process wouldn’t be a snap of the finger. Undoubtedly, the room will be loaded with combustion.

      But, would I want to lose market share because it was less stressful not to put brain cells to work on the big picture of options? On the consumer level, would a home buyer speak to only one bank to get mortgage rates?

      The price we pay for the wrong choice

      “More or less” comes down to this: context. Or, too put it another way, it all comes down to what the cost will be if we choose the wrong option because we didn’t have all the choices from which to select.