Paradox of Choice

Theory explained by Oreoluwa Akinnawo and written by Barry Schwartz

The paradox of choice, popularized by psychologist Barry Schwartz in a 2004 book, is the theory that having more options, or choices, makes it harder for people to make a decision, potentially hurting their well-being in the process.

The theory has been tested and analyzed in many different ways over the years. Perhaps the most popular experiment, when it comes to business, involves samples of jam at a supermarket. In this experiment, researchers arranged free samples of a brand of jam and asked people to try different flavors. In one scenario, there were 6 different varieties. And on the other, there were 24. Traditional thinking would have you believe that more options are better because consumers can pick the one that best fits their needs. However, the results of the study showed something else happened entirely. Although more people tried the jam when they were presented with 24 options vs. 6, much fewer ended up buying the product.

And so the paradox of choice theory tells us that there is a point at which offers too many options makes it difficult to make a decision and that consumers may not make a decision at all as a way of coping.

How Can One Manage The Paradox Of Choice?

Even if you might believe people would be happier if given a larger range of choices in everyday life, people actually make better decisions and end up happier and more satisfied when fewer options are presented to them. Reducing choices will reduce consumer anxiety as too many options is overwhelming for their brains and, having to choose just one option from a large selection of “desirable” options often leads them to feel unsatisfied and hung up on those other possibilities they might miss out on. The more choices they are given, the higher their expectations become and the lower their sense of final accomplishment and satisfaction. It can even lead to “suspended action”, where they are so overwhelmed by the choice on offer that they fail to make a decision at all.

Run A/B Tests: Do not assume you know what your customers need without facts and figures to back it up, even when you have the data to back it up, remember that your customer’s decisions are in a constant state of flux so their choices never stay the same for too long. Do you think you might have too many different product/pricing options? Try a split test where you take some away and see if that helps conversion rate. Consider simplifying the decision by combining features of one option with another, and limit the choices as much as possible.

Personalized Customer Experience: Companies are using design thinking, innovation labs, and advanced technology to study customers and co-create new solutions with them. With digital commerce, connected devices, and geo-marketing, co-creation can move into real-time, enabling B2B and B2C companies to track customers closely. Obviously, this is a two-way street, but when companies give incredible value, customers welcome receiving a seamless experience and personalized offers.

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Books

Would you like to go more in-depth? Here are our recommendations:

The Paradox of Choice: Why More Is Less by Barry Schwartz Buy this book
How We Decide by Jonah Lehrer Buy this book
The Upside of Irrationality: The Unexpected Benefits of Defying Logic by Dan Ariely Buy this book
Choices, Values, and Frames by Daniel Kahneman & Amos Tversky Buy this book

Sources

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