Paradox Of Choice

The paradox of choice:Too many good options?,[object Object],Dr. Russell James III, Texas Tech University,[object Object]

Our choices and our satisfaction are driven by the comparisons we make ,[object Object],Nearby additional,[object Object],Alternative,[object Object],Future,[object Object],Past,[object Object],Expected,[object Object],Current,[object Object],Multiple Alternative,[object Object],Relevant Observed,[object Object]

Behavioral Economics Concepts,[object Object],Loss Aversion; Endowment Effect; Status Quo Bias,[object Object],Availability Effects,[object Object],Altering Time Preference,[object Object],Nearby additional,[object Object],Alternative,[object Object],Future,[object Object],Past,[object Object],Expected,[object Object],Current,[object Object],Hedonic Adaptation,[object Object],Placebo Effect; Stereotypes,[object Object],Multiple Alternative,[object Object],Anchoring; Paradox of Choice ,[object Object],Peer Effects; Relative Standing,[object Object],Relevant Observed,[object Object]

Standard Economics:,[object Object],Simplicity is bad,[object Object]

Standard economics:,[object Object],Hyper-choice is good,[object Object]

Experimental findings:,[object Object],Simplicity can be good,[object Object]

Experimental findings:,[object Object],Hyper-choice can be bad,[object Object]

Choice variety in standard economics,[object Object],Good,[object Object]

Choice variety in standard economics,[object Object],Better,[object Object]

In standard economics, more choice is always better because I can simply ignore the less desirable choices,[object Object],<,[object Object],<,[object Object]

Diminishing marginal utility and choice variety in standard economics,[object Object],Variety is also important because diminishing marginal utility changes desires.,[object Object]

Greater availability of tempting options leads to greater consumption. ,[object Object],But otherwise, more options are always a good thing, right?,[object Object]

Hyperchoice and the choice paradox,[object Object],We think more choice is better, but there can be problems with excessive choice:,[object Object],Decisions become less likely (paralysis),[object Object],Choice satisfaction drops,[object Object]

Hyperchoiceand Paralysis,[object Object],http://www.youtube.com/watch?v=VO6XEQIsCoM,[object Object],0:25-9:57,[object Object]

Decision paralysis,[object Object],A,[object Object],Tasting booth for unusual jams in an upscale grocery story. ,[object Object],A: offered 6 jams,[object Object],B: offered 24 jams,[object Object],What percentage of tasters later purchased one of the jams?,[object Object],B,[object Object],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,[object Object]

Decision paralysis,[object Object],30%,[object Object],A,[object Object],Tasting booth for unusual jams in an upscale grocery story. ,[object Object],A: offered 6 jams,[object Object],B: offered 24 jams,[object Object],What percentage of tasters later purchased one of the jams?,[object Object],B,[object Object],3%,[object Object],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,[object Object]

Decision paralysis,[object Object],40%,[object Object],A,[object Object],What percentage of shoppers stopped at the display?,[object Object],Shoppers were more attracted to greater variety, but were less likely to actually make a decision.,[object Object],B,[object Object],60%,[object Object],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,[object Object]

Which sections were most likely to,[object Object],An extra credit writing assignment in a class at Stanford: some sections had 6 topic options. Others had 30 (6 + 24) topic options.,[object Object],complete the essay?,[object Object],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,[object Object]

6 topics available30 topics available,[object Object],74% completed 60% completed,[object Object],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,[object Object]

800,000 eligible employees at 657 companies,[object Object],401(k) plans ranged from 2 to 60 investment options,[object Object],As choices increased what happened to the likelihood of investing?,[object Object],Decreased b) Increased c) Stayed the same,[object Object]

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.,[object Object]

Choice paradox and satisfaction,[object Object],http://www.youtube.com/watch?v=VO6XEQIsCoM,[object Object],Barry Schwartz. 9:57-17:20,[object Object]

An experiment with two digital video player versions,[object Object],Before use, which had higher rating of “How satisfied would you be if you subscribed to the digital player?”,[object Object],Few features (7),[object Object],Many features (21),[object Object],No difference,[object Object]

An Experiment with Digital Video Players,[object Object],D. 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.,[object Object]

An experiment with two digital video player versions,[object Object],After use, which had higher rating of “How satisfied were you with the digital player you used?”,[object Object],Few features (7),[object Object],Many features (21),[object Object],No difference,[object Object]

Do more television options make you better off?,[object Object],72,012 respondents from 24 nations with varying numbers of available television stations,[object Object],Comparing among those with similarly high or low levels of television watching compared with group norms,[object Object]

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,[object Object]

Choice paradox and satisfaction,[object Object],No choice can be bad.,[object Object],Excessive choice can be bad.,[object Object],Limited choice may be best.,[object Object],Satisfaction,[object Object],Choice availability,[object Object]

Participants choosing from a selection of 30 chocolates instead of 6 chocolates were “more dissatisfied and regretful of the choices they made.”,[object Object],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,[object Object]

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.,[object Object]

Different people were tested with different numbers of gift box options. ,[object Object],According to standard economic theory, which group should be the happiest with their selected option?,[object Object],5 options,[object Object],10 options,[object Object],15 options,[object Object],30 options,[object Object]

Different people were tested with different numbers of gift box options. ,[object Object],When asked afterwards, which group actually reported the highest satisfaction with their choice?,[object Object],5 options,[object Object],10 options,[object Object],15 options,[object Object],30 options,[object Object]

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.,[object Object]

When asked afterwards, which group most enjoyed the process of selecting the box?,[object Object],5 options,[object Object],10 options,[object Object],15 options,[object Object],30 options,[object Object]

Breaking apart the choice paradox,[object Object],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.,[object Object]

Increases time spent contemplating negative results,[object Object],Attaches personal responsibility to the negative outcome,[object Object],When all options are negative, even limited choice can be undesirable,[object Object]

An experiment with unpleasant yogurt flavors: ,[object Object],sage, chili powder, tarragon, or celery seeds,[object Object],Either asked to pick one or told they would be given one randomly.,[object Object]

Did you like the fact that you were given a choice? ,[object Object], 5.50 agreement,[object Object],Did you like the fact that you did not have to choose? ,[object Object], 4.41 agreement,[object Object],But, did choice result in greater satisfaction?,[object Object],Yes,[object Object],No,[object Object],Made no difference,[object Object],S. 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.,[object Object]

Not too many options here (only 4), but all options were negative,[object Object],S. 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.,[object Object]

“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.”,[object Object],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.,[object Object]

Simplicity v. Variety,[object Object],Sometimes too many options…,[object Object],can make decisions difficult.,[object Object],may lead to doing nothing.,[object Object],are more likely to cause regret.,[object Object]

Diversification Bias,[object Object],We hate losing options, even when they are bad ones. ,[object Object],We love diversification, even when it is pointless and costly.,[object Object],We avoid focusing, even when there is only one correct choice.,[object Object],Paradox of Choice: Too many options ,[object Object],[object Object]

are more likely to cause regret.,[object Object]

Paradox Of Choice

Paradox Of Choice

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