by We all want more choices since choice is synonymous with freedom. The more options, the better, right? Not so fast! Having too many choices can be just as bad as having too few. Let’s investigate the concept of overchoice and how you can make the best economic and psychological decisions in spite of this.
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Sometimes Less is More
“[Overchoice takes place when] the advantages of diversity and individualization are canceled by the complexity of buyer’s decision-making process.” — From Alvin Toffler, Future Shock, 1971
Basic economic theory says that having many choices has higher value than having just a few choices. It is higher value because it provides greater utility.
Let’s go over an example:
Would you rather have $100 in cash or a $100 gift card to Target?
The cash SHOULD be any reasonable person’s preference. Why? Because the cash provides greater utility. It can be used to buy groceries at Costco, it can be used to purchase gas, it can be saved in your bank, it can be invested. The gift card, on the other hand, HAS to be spent at Target and nowhere else. Thus, having more choices, provides greater utility, and is therefore the more favorable economic choice.
However, the best economic decisions can be different from the best psychological decisions!
How many times have you stood in your neighborhood grocery aisle comparing 6 different brands of coconut water? There’s Zico, Naked, Vita Coco, Harmless, Parrot, and Generic Store Brand. Hmm maybe you’ll try the Naked this time since you bought Vita Coco last time? But there’s a sale on Harmless, which your friend recommended. But you forgot the coupon that’s sitting on your nightstand. The bigger size costs less per ounce than the smaller size. But last time you couldn’t finish the bigger size and it went bad. Maybe this time will be different. Forget it, I’m no longer in the mood to buy coconut water. Did your brain explode from analysis paralysis?
Analysis paralysis describes an individual or group process when overanalyzing or overthinking a situation can cause forward motion or decision-making to become “paralyzed”, meaning that no solution or course of action is decided upon. Wikipedia
As you can see, having too many choices is not such a good thing. Trader Joe’s understands this, and that is one of the reasons why it’s managed to become so successful.
For many of its items, it only offers ONE option for purchase. There is only one option for frozen Kung Pao Chicken. There is only one option for frozen Beef and Broccoli. There are only two options for coconut water, Zico and the store brand. Consumers, when presented with LESS options, are presented with less decision-making, frustration, and analysis paralysis.
Having LESS choices, presents a worse economic outcome, but can be a better psychological outcome!
Narrow your choices if you want to make a decision
Often times, my girlfriend and I decide to order take out to share a meal together. But with so many dining options, the decision process can be daunting. Chinese, Indian, Korean, Italian, Middle Eastern, Japanese? Uber Eats, Grubhub, Doordash?
To avoid analysis paralysis, we might narrow it down to two cuisines, for example Chinese and Indian. I’ll do some quick research and narrow it down to Hop Sing’s (Chinese) and Clay Oven (Indian) and present these options to my partner. Her decision-making process is quite simple since she is presented with just 2 options, rather than the endless number of restaurants. I feel good because I was fine with either of the 2 options. She feels great because she was in charge of her own destiny. If she chose a bad restaurant, she has no one to blame but herself. =)
Strive for Simplicity
Not everyone wants more choices. Sometimes people just want simplicity.
For example, many laptops with a Windows operating system can run hundreds if not thousands of different functions. A Windows user can play resource heavy computer games, adjust hundreds of different customization options, and change CPU clock speed, just to name a few.
Some people just want something simple and Apple understands this. They might want a computer that runs smoothly, can handle internet browsing, email, and video chat without a hitch. Apple caters to this brand of consumer by offering the mantra: “It Just Works”.
How to Confront Too Many Choices
As a Consumer:
As a consumer presented with so many choices of peanut butter, it’s important to ask yourself, what do you really want?
Do you want to try something new? Do you want to save money?
It is not worth it to sacrifice your happiness and wellbeing to determine the “right” answer. If you find yourself stressing out in the grocery aisle, just understand that there is no right answer.
Make your decision and understand that you made your decision based on good reason, whether your quick analysis or your intuition. Be happy with your choice and move on with your life!
As a Marketer:
A 2000 study by psychologists Sheena Iyengar and Mark Lepper presented shoppers with a display table with 24 varieties of gourmet jam. Those who sampled the spreads received a coupon for $1 off any jam.
On another day, shoppers saw a similar table, but with only six varieties of the jam on display.
Although the large display attracted more interest than the small one, people who saw the large display were one-tenth as likely to buy as people who saw the small display.
As a marketer, understand that more is not always better. If you want to maximize your sales, be sure to understand your consumer, and rid them of the overchoice / choice paralysis problem. If you want to sell more product, maybe it’s not a good idea to sell 24 different varieties of it!
Source: Harvard Business Review
Putting It All Together
Sometimes having choices is good. But having too many choices can lead to frustration and analysis paralysis. As a consumer and a marketer, try limiting your choices to make it easier to get what you want, or sell more product, respectively. Sometimes striving for simplicity makes like much more enjoyable.
Let me know your thoughts!
Is it harder for you to make a decision when confronted with too many choices?
