Imagine you are a 10-year-old kid waiting on a hot summer afternoon for the local ice-cream seller to show up in your neighbourhood. As you hear the jingling of the bell indicating his arrival on your street, you are asked to make a wish: The ice-cream seller could bring only a couple of standard flavours or he could offer you a choice of 26 different flavours. Which one would you prefer? Most people would opt for the latter. But will this choice necessarily make you happier? Do more choices always translate into greater satisfaction and happiness?
Interestingly, the answer is usually no.
Most people would scoff at the idea that greater consumer choice can actually be harmful to consumers, but there is increasing evidence that consumers make poorer choices when faced with more options. Several factors come into play as the number of choices increase. First, there is the paralysis effect. While picking your preferred brand when choosing between Cadbury and Amul chocolates may be easy, adding a dozen more brands and asking you to pick one that will give you the most satisfaction can actually backfire.
People freeze and may even choose not to decide in this situation. Instead of spending the cognitive effort to process all that information, they may simply postpone their purchase to their next visit to the store. In one classic experiment, researchers found that people were much more likely to purchase exotic jams if they were presented with six varieties to choose from instead of 24 or 30. While postponing the purchase of chocolate or jam may not do you much harm (and may actually be good to keep that waistline under control), the consequences can be significant if the decision is more substantive.
For example, if you decide to just leave your savings in your bank account instead of investing it in the stock market because you’re overwhelmed by all the choices presented to you, you are likely to be significantly worse off in the long run. Second, when people are faced with more choices than they know how to evaluate easily, they tend to use simplifying strategies to reduce the number of choices. These simplifying strategies may result in poorer decision making. If you get 200 applications for a position opening instead of five, you may apply some rule of thumb to reduce the range of choices. We know of a hiring situation where it was decided to automatically rule out any candidate who had even a single spelling error on their vitae. While this helped reduce the size of the applicant pool quickly, it is likely that the resulting pool eliminated some otherwise strong candidates.
So, the simplification strategies we use when faced with too many choices can result in worse decisions than if we were faced with fewer choices. For businesses, this suggests that big brands may benefit significantly from the proliferation of choices, because when faced with a huge array of brands, a common simplifying strategy is to go with a familiar brand instead of evaluating the merits of each presented brand.
Finally, research has also shown that we end up being less satisfied with our final choice when that choice is made from a larger pool of options. Making the same choice would result in greater satisfaction if it were made from a smaller pool. In the jam study mentioned earlier, not only were people more likely to make a purchase when presented with fewer choices, they were actually more satisfied with their choice at the end.
The moral of the story is to recognize the consequences of the increased number of choices. While it feels good to have choices, one should not forget that having several choices is not the same as having the option of choosing several at the same time. The task is still about picking one from several, and this is why more choices can actually hurt. More choices require us to do two things that most of us would rather avoid: spend more time and effort to compare the alternatives and make the trade-offs to arrive at a decision.
So, the next time you are in a situation where you don’t have the luxury of choosing from a wider set of options, consider all the hassles and pain you are spared because of your smaller choice set. In some cases, less is actually more!
Praveen Aggarwal is an associate professor of marketing at the Labowitz School of Business & Economics at the University of Minnesota Duluth and Rajiv Vaidyanathan is a professor of marketing and director of MBA programmes at the University of Minnesota Duluth.
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