When more is less: the effects of choice overload on decision-making and satisfaction
Ernesto C
Paradigm theory, the prevailing economic school of thought, states that all economic agents act rationally; namely, consumers maximize their utility while producers maximize profits so they too can maximize their own utility. In an increasingly consumption-oriented world, where we are constantly bombarded by advertisements, choice is a luxury that many people have – whether it is a holiday destination, a new car, or a seemingly infinite number of consumer products. Most psychology and economics models cannot see a scenario where having more choice is detrimental to decision-makers; it attracts individuals and gives them more chance of finding the product which is perfect for them. However, more recently, it has been suggested that an overabundance of options can actually have an adverse effect on decision makers, such as a decrease in motivation to make and commit to a choice, but also an increase in negative emotions such as disappointment and regret afterwards. This phenomenon is referred to as ‘choice overload’, defined as ‘an increase in the number of options to choose from may lead to adverse consequences such as a decrease in the motivation to choose or the satisfaction with the finally chosen option’. 1 By reviewing previous studies and later conducting my own experiment, I aim to apply the theory of choice overload into real world contexts for businesses and public services. In an era where globalization and the internet have made sourcing products from all over the world relatively easy, extensive choice is now widely available. This supports greater individuality and personalization, meaning that diverse preferences can be satisfied, attracting a wider variety of consumers. Greater choice also improves the standard of living; consumers gain access to more markets, simultaneously gaining more choice and therefore more chance of finding exactly what they are looking for. Not only this, but it means there is more competition for firms. In response, they try to make their product as unique and attractive as possible, further increasing the quality of goods and services produced and therefore the standard of living. Furthermore, firms could perhaps lower their prices, meaning that consumers’ real incomes and in turn standards of living increase. Extensive choice also mitigates research costs and times, as people do not have to go out of their way to seek alternatives, as many options are aggregated in one place. This makes comparison efficient, improving decision confidence and reducing effort. However, this is not always the case. Greater choice does not always mean greater freedom and satisfaction. When given more options, there are a lot of similarities, meaning that there is information overload, and that decisions have to be made on small details, which becomes time consuming and difficult. As a result, the average person is unwilling to spend that much time on a decision and so will rely on heuristics – rules of thumb that help make decisions –, meaning that they are likely to end up with a satisfactory outcome rather than an optimal one, therefore not maximising their utility. Furthermore, if options are similar, it becomes increasingly more difficult to justify one decision, diminishing the motivation to commit, and increasing regret and disappointment. At the heart of
1 See Scheibehenne et al. 2010: 409.
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