Paradox Of Choice
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The document discusses the paradox of choice, highlighting how an excess of options can lead to decision paralysis and decreased satisfaction. It presents various studies showing that more choices do not always result in better outcomes and can sometimes hinder decision-making. The findings suggest that while choice is generally perceived as desirable, too many options can lead to negative psychological effects.
Paradox Of Choice
- 1. The paradox of choice:Too many good options?Dr. Russell James III, Texas Tech University
- 2. Our choices and our satisfaction are driven by the comparisons we make Nearby additionalAlternativeFuturePastExpectedCurrentMultiple AlternativeRelevant Observed
- 3. Behavioral Economics ConceptsLoss Aversion; Endowment Effect; Status Quo BiasAvailability EffectsAltering Time PreferenceNearby additionalAlternativeFuturePastExpectedCurrentHedonic AdaptationPlacebo Effect; StereotypesMultiple AlternativeAnchoring; Paradox of Choice Peer Effects; Relative StandingRelevant Observed
- 6. Experimental findings:Simplicity can be good
- 7. Experimental findings:Hyper-choice can be bad
- 8. Choice variety in standard economicsGood
- 9. Choice variety in standard economicsBetter
- 10. Best!
- 11. In standard economics, more choice is always better because I can simply ignore the less desirable choices<<
- 12. Diminishing marginal utility and choice variety in standard economicsVariety is also important because diminishing marginal utility changes desires.
- 13. Greater availability of tempting options leads to greater consumption. But otherwise, more options are always a good thing, right?
- 14. Hyperchoice and the choice paradoxWe think more choice is better, but there can be problems with excessive choice:Decisions become less likely (paralysis)Choice satisfaction drops
- 16. Decision paralysisATasting booth for unusual jams in an upscale grocery story. A: offered 6 jamsB: offered 24 jamsWhat percentage of tasters later purchased one of the jams?BIyengar, S. (Columbia) & Lepper, M. (Stanford), 2000, When choice is demotivating: Can one desire too much of a good thing. Journal of Personality and Social Psychology, 79, 995-1006
- 17. Decision paralysis30%ATasting booth for unusual jams in an upscale grocery story. A: offered 6 jamsB: offered 24 jamsWhat percentage of tasters later purchased one of the jams?B3%Iyengar, S. (Columbia) & Lepper, M. (Stanford), 2000, When choice is demotivating: Can one desire too much of a good thing. Journal of Personality and Social Psychology, 79, 995-1006
- 18. Decision paralysis40%AWhat percentage of shoppers stopped at the display?Shoppers were more attracted to greater variety, but were less likely to actually make a decision.B60%Iyengar, S. (Columbia) & Lepper, M. (Stanford), 2000, When choice is demotivating: Can one desire too much of a good thing. Journal of Personality and Social Psychology, 79, 995-1006
- 19. Which sections were most likely toAn extra credit writing assignment in a class at Stanford: some sections had 6 topic options. Others had 30 (6 + 24) topic options.complete the essay?Iyengar, S. (Columbia) & Lepper, M. (Stanford), 2000, When choice is demotivating: Can one desire too much of a good thing. Journal of Personality and Social Psychology, 79, 995-1006
- 20. 6 topics available30 topics available74% completed 60% completedIyengar, S. (Columbia) & Lepper, M. (Stanford), 2000, When choice is demotivating: Can one desire too much of a good thing. Journal of Personality and Social Psychology, 79, 995-1006
- 21. 800,000 eligible employees at 657 companies401(k) plans ranged from 2 to 60 investment optionsAs choices increased what happened to the likelihood of investing?Decreased b) Increased c) Stayed the same
- 22. S. Botti (Cornell) & S. S. Iyengar (Columbia), 2006, The dark side of choice: When choice impairs social welfare. Journal of Public Policy and Marketing, 25(1), 24-38.
- 23. Choice paradox and satisfactionhttp://www.youtube.com/watch?v=VO6XEQIsCoMBarry Schwartz. 9:57-17:20
- 24. An experiment with two digital video player versionsBefore use, which had higher rating of “How satisfied would you be if you subscribed to the digital player?”Few features (7)Many features (21)No difference
- 25. An Experiment with Digital Video PlayersD. Thompson (U. Maryland), R. Hamilton (U. Maryland), R. Rust (U. Maryland), 2005, Feature fatigue: When product capabilities become too much of a good thing. Journal of Marketing Research, 42, 432-442.
- 26. An experiment with two digital video player versionsAfter use, which had higher rating of “How satisfied were you with the digital player you used?”Few features (7)Many features (21)No difference
- 27. An Experiment with Digital Video PlayersD. Thompson (U. Maryland), R. Hamilton (U. Maryland), R. Rust (U. Maryland), 2005, Feature fatigue: When product capabilities become too much of a good thing. Journal of Marketing Research, 42, 432-442.
- 28. Do more television options make you better off?72,012 respondents from 24 nations with varying numbers of available television stationsComparing among those with similarly high or low levels of television watching compared with group norms
- 29. C. Benesch(U. of Zurich), B. Frey (U. Zurich), & A. Stutzer (U. Basel), 2006, TV Channels, Self Control and Happiness, Working Paper - Institute for Empirical Research in Economics, University of Zurich
- 30. Choice paradox and satisfactionNo choice can be bad.Excessive choice can be bad.Limited choice may be best.SatisfactionChoice availability
- 31. Participants choosing from a selection of 30 chocolates instead of 6 chocolates were “more dissatisfied and regretful of the choices they made.”Iyengar, S. (Columbia) & Lepper, M. (Stanford), 2000, When choice is demotivating: Can one desire too much of a good thing? Journal of Personality and Social Psychology, 79, 995-1006
- 32. Participants were given a picture representing a set of gift boxes with a certain number of alternatives. They were asked to choose the gift box they would buy to pack a present for a friend.
- 33. Different people were tested with different numbers of gift box options. According to standard economic theory, which group should be the happiest with their selected option?5 options10 options15 options30 options
- 34. Different people were tested with different numbers of gift box options. When asked afterwards, which group actually reported the highest satisfaction with their choice?5 options10 options15 options30 options
- 35. E. Reutskaja (IESE) & R. Hogarth (UniversitatPompeuFabra-Barcelona), 2009, Satisfaction in Choice as a Function of the Number of Alternatives: When “Goods Satiate. Psychology and Marketing, 26(3), 197-203.
- 36. When asked afterwards, which group most enjoyed the process of selecting the box?5 options10 options15 options30 options
- 37. E. Reutskaja (IESE) & R. Hogarth (UniversitatPompeuFabra-Barcelona), 2009, Satisfaction in Choice as a Function of the Number of Alternatives: When “Goods Satiate. Psychology and Marketing, 26(3), 197-203.
- 38. Breaking apart the choice paradoxE. Reutskaja (IESE) & R. Hogarth (UniversitatPompeuFabra-Barcelona), 2009, Satisfaction in Choice as a Function of the Number of Alternatives: When “Goods Satiate. Psychology and Marketing, 26(3), 197-203.
- 39. Increases time spent contemplating negative resultsAttaches personal responsibility to the negative outcomeWhen all options are negative, even limited choice can be undesirable
- 40. An experiment with unpleasant yogurt flavors: sage, chili powder, tarragon, or celery seedsEither asked to pick one or told they would be given one randomly.
- 41. Did you like the fact that you were given a choice? 5.50 agreementDid you like the fact that you did not have to choose? 4.41 agreementBut, did choice result in greater satisfaction?YesNoMade no differenceS. Botti (U. Chicago) & S. Iyengar (Columbia U.), 2004, The psychological pleasure and pain of choosing: When people prefer choosing at the cost of subsequent outcome satisfaction. Journal of Personality and Social Psychology, 87(3), 312-326.
- 42. Not too many options here (only 4), but all options were negativeS. Botti (U. Chicago) & S. Iyengar (Columbia U.), 2004, The psychological pleasure and pain of choosing: When people prefer choosing at the cost of subsequent outcome satisfaction. Journal of Personality and Social Psychology, 87(3), 312-326.
- 43. “Although increased choice is perceived as desirable, in some circumstances, the provision of choice either inhibits decision makers’ likelihood to make a choice or detrimentally affects their experienced well-being after the choice is made.”S. Botti (Cornell) & S. Iyengar (Columbia), 2006, The dark side of choice: When choice impairs social welfare. Journal of Public Policy and Marketing, 25(1), 24-38.
- 44. Simplicity v. VarietySometimes too many options…can make decisions difficult.may lead to doing nothing.are more likely to cause regret.
- 45. Diversification BiasWe hate losing options, even when they are bad ones. We love diversification, even when it is pointless and costly.We avoid focusing, even when there is only one correct choice.Paradox of Choice: Too many options can make decisions difficult.
- 46. may lead to doing nothing.
- 47. are more likely to cause regret.Diversification BiasWe hate losing options, even when they are bad ones. We love diversification, even when it is pointless and costly.We avoid focusing, even when there is only one correct choice.The struggle is important because…The Paradox of Choice Too many optionscan make decisions difficult.
- 48. may lead to doing nothing.
- 49. are more likely to cause regret.Controlling your decision environment often means eliminating options
- 50. Slides by: Russell James III, J.D., Ph.D., CFP®Associate Professor Division of Personal Financial Planning Texas Tech [email protected] use these slides! If you think you might use anything here in a classroom, please CLICK HEREto let me know. Thanks!The outline for this behavioral economics series is at http://www.slideshare.net/rnja8c/outline-for-behavioral-economics-course-component