When Choice is a Bad Thing

Can’t stand the sheer amount things available to you? Yeah, that’s why we hate shopping for a mobile plan.

You aren’t alone. In fact, a recent study in the Review of Economics and Statistics found that too much choice mainly helped people make a bad choice. Researchers set up an online experiment where 111 participants were asked to choose one option amongst sixteen that would provide them the best payoff (researchers were inspired by American Medicare—no joke). Participants who made the optimal choice would be rewarded with $25.

A few strategies were employed:

Simultaneous choice. All sixteen choices were considered together.

Sequential elimination. Participants considered four choices. They chose the best, eliminated three, and then added three new choices. Rinse and repeat until one option remains.

Sequential tournament. A computer chose four groups of four choices, and participants chose one option per group. Those options were then put into a final group, from which the best option was chosen.

Participants could use all three approaches, though they had to specify what they did. Sequential tournament produced the best results, but it was the least popular method. The most popular was considering all sixteen options at once, but that actually produced the worst choices. The sequential elimination option didn’t do much better—people tend to just stick with their first choice, thus avoiding any more decision-making.

The handy thing about this data is you can (sometimes) apply it to real life. Comparing twelve insurance plans? Break ‘em into groups of three and then put all the finalists in one group—and don’t be lazy and just pick one out of twelve. You’ll probably make a bad choice.



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