The Paradox of Choice


The Paradox of Choice – Why More Is Less is a 2004 book by American psychologist Barry Schwartz. In the book, Schwartz argues that eliminating consumer choices can greatly reduce anxiety for shoppers.

Schwartz's thesis

Schwartz assembles his argument from a variety of fields of modern psychology that study how happiness is affected by success or failure of goal achievement.

When we choose

Schwartz compares the various choices that Americans face in their daily lives by comparing the selection of choices at a supermarket to the variety of classes at an Ivy League college.
Schwartz maintains that it is precisely so that we can focus on our own wants that all of these choices emerged in the first place.

How we choose

Schwartz describes that a consumer's strategy for most good decisions will involve these steps:
  1. Figure out your goal or goals. The process of goal-setting and decision making begins with the question: "What do I want?" When faced with the choice to pick a restaurant, a CD, or a movie, one makes their choice based upon how one would expect the experience to make them feel, expected utility. Once they have experienced that particular restaurant, CD or movie, their choice will be based upon a remembered utility. To say that you know what you want, therefore, means that these utilities align. Nobel Prize-winning psychologist Daniel Kahneman and his colleagues have shown that what we remember about the pleasurable quality of our past experiences is almost entirely determined by two things: how the experiences felt when they were at their peak, and how they felt when they ended.
  2. Evaluate the importance of each goal. Daniel Kahneman and Amos Tversky have researched how people make decisions and found a variety of rules of thumb that often lead us astray. Most people give substantial weight to anecdotal evidence, perhaps so much so that it cancels out expert evidence. The researchers called it the availability heuristic describing how we assume that the more available some piece of information is to memory, the more frequently we must have encountered it in the past. Salience will influence the weight we give any particular piece of information.
  3. Array the options. Kahneman and Tversky found that personal "psychological accounts" will produce the effect of framing the choice and determining what options are considered as subjects to factor. For example, an evening at a concert could be just one entry in a much larger account, of say a "meeting a potential mate" account. Or it could be part of a more general account such as "ways to spend a Friday night". Just how much an evening at a concert is worth will depend on which account it is a part of.
  4. Evaluate how likely each of the options is to meet your goals. People often talk about how "creative accountants can make a corporate balance sheet look as good or bad as they want it to look." In many ways Schwartz views most people as creative accountants when it comes to keeping their own psychological balance sheet.
  5. Pick the winning option. Schwartz argues that options are already attached to choices being considered. When the options are not already attached, they are not part of the endowment and choosing them is perceived as a gain. Economist Richard Thaler provides a helpful term sunk costs.
  6. Modify goals. Schwartz points out that later, one uses the consequences of their choice to modify their goals, the importance assigned to them, and the way future possibilities are evaluated.
Schwartz relates the ideas of psychologist Herbert A. Simon from the 1950s to the psychological stress that most consumers face today. He notes some important distinctions between, what Simon termed, maximizers and satisficers. A maximizer is like a perfectionist, someone who needs to be assured that their every purchase or decision was the best that could be made. The way a maximizer knows for certain is to consider all the alternatives they can imagine. This creates a psychologically daunting task, which can become even more daunting as the number of options increases. The alternative to maximizing is to be a satisficer. A satisficer has criteria and standards, but a satisficer is not worried about the possibility that there might be something better. Ultimately, Schwartz agrees with Simon's conclusion, that satisficing is, in fact, the maximizing strategy.

Why we suffer

Schwartz integrates various psychological models for happiness showing how the problem of choice can be addressed by different strategies. What is important to note is that each of these strategies comes with its own bundle of psychological complication.
Attempts to duplicate the paradox of choice in other studies have had mixed success. A meta-analysis incorporating research from 50 independent studies found no meaningful connection between choice and anxiety, but speculated that the variance in the studies left open the possibility that choice overload could be tied to certain highly specific and as yet poorly understood pre-conditions.
A new meta-analysis, conducted in 2015 and incorporating 99 studies, was able to isolate when reducing choices for your customers is most likely to boost sales. The study identified four key factors—choice set complexity, decision task difficulty, preference uncertainty, and decision goal—that moderate the impact of assortment size on choice overload. It also documented that when moderating variables are taken into account the overall effect of assortment size on choice overload is significant—a finding counter to the data reported by prior meta-analytic research.

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