The Paradox of Choice: When Extra Options Mean Extra Confusion
by Po-Yu Liu
Editor’s note: This piece is part of the SHC PG Talks where we ask the postgraduate members of the college to discuss an aspect of their research or discipline and how it relates to the community. We invite the PG students to share your ideas, breakthroughs, and thoughts to us. Email us at firstname.lastname@example.org.
Have you ever entered a restaurant, stared at a menu with hundreds of dishes, and struggled with choosing what to eat? Or have you ever gone out for ice cream, went with a scoop of chocolate, only to regret your decision as your friend digs into a seemingly more delicious strawberry? If so, you are not alone. I have faced similar situations in my everyday life, and so did the economists and psychologists who discovered that too many choices might sometimes make us worse off.
According to traditional economic theory, having more choices is a good thing for a rational person. We can illustrate this with a simple example.
Suppose you want to buy a MacBook. Among a whole series of different models, you find one that you think is best for you. Now imagine that Apple suddenly announces a new MacBook model before you can make your purchase — it’s more expensive, but comes with a fancier touch bar. As a rational consumer, the extra choice should not leave you worse off. If the new model suits you better, you decide to buy it and are better off. If not, you stick with your original choice and lose nothing.
However, this is not always the case. The problem is that humans are not always rational, so having more choice is not necessarily a good thing. Sheena Iyengar, an economist from Columbia University, and Mark Lepper, a psychologist from Stanford University, were the first to discover this phenomenon.
In their paper, “When Choice is Demotivating: Can One Desire Too Much of a Good Thing?” published in 2000, presented three different experiments on choosing jams, essay topics, and chocolate. The first experiment found that jam sales were lower when stores offered customers 30 flavours to choose from instead of 6. The second experiment discovered that when students were given the option to write an essay for extra credit the group with 30 topics to choose from exhibited a lower submission rate and overall poorer article quality compared to the group with 6 topics. The third experiment allowed subjects to choose one chocolate from a list. The group which chose from 30 kinds of chocolate reported greater regret and dissatisfaction after tasting the chocolate they chose compared to the group with 6 kinds. The three separate experiments reached the same conclusion — having too much choice results in sub-optimal results.
Iyengar and Lepper’s research inspired researchers in other fields to try and recreate their findings, and consistent results were observed. This led to a startling conclusion — contrary to traditional economic theory, people tend to make bad decisions when faced with too many options or avoid making decisions altogether. This finding is rather counter-intuitive, as people instinctively prefer having greater choice despite the research showing that greater choice is actually self-defeating.
There are a number of possible explanations behind the paradox of choice. One explanation is that making trade-offs among a pool of options can be an exhausting and unpleasant experience. This drives us towards indecision, lesser satisfaction and poor decision-making, which all result in suboptimal outcomes.
In my own experience, I struggle similarly when confronted with many choices. I still remember some exams in which I had multiple questions to choose from. I always struggled on these exams, because I would end up trying a new question whenever I encountered any difficulties. I spent so much time jumping back and forth through the problem set that I often ended up not solving any of the questions by the end of the exam. Having an extra option to choose from led to a sub-optimal result. It’s likely that I would have been better off had I concentrated on solving a smaller subset of questions.
Another possible explanation for the paradox of choice is that people have a general tendency to avoid regret. In this explanation, regret occurs when we realize there was a better choice available to us. We regret when we order a dish only to find out that our friend ordered something more delicious. We regret our purchase of a new laptop when we later discover that a higher-end model was available for a more affordable price. The main takeaway here is that the probability of regret is greater when we are faced with more options. Thus we avoid decisions to avoid regret, even if our inaction can potentially lead to missed opportunities.
So how can we counteract the paradox of choice? One plausible strategy is to create a set of mental short-circuits to facilitate our decision process. For example, we can restrict ourselves to a set of good decisions that we have made before. Consider the situation of ordering food in a school canteen. If you already know that rice dishes are always good, you might decide to choose from rice dishes only. This leaves you with fewer choices, which might be preferential to choosing from the original, larger menu.
Another good strategy is learning when to choose. The process of choosing is mentally taxing, so learning when to choose can greatly reduce our stress while still making satisfactory decisions. Mark Zuckerberg is an expert in this strategy. He wears the same T-shirt every day because choosing between different clothes is exhausting — he prefers doing his job overspending “any of [his] energy on things that are silly or frivolous”.
Although human beings are endowed with advanced reasoning abilities, it is clear that we are sometimes deeply irrational as well. Our behaviours tend to deviate from theoretical models and intuition because most economic models are based on the questionable assumption that humans are totally rational. It is difficult to completely eradicate the paradox of choice, but by acknowledging our irrationality, we can begin to develop strategies to help us cope and reach a happier state of mind.
Po-Yu Liu is a financial researcher with an engineering spirit. He is a Taiwanese pursuing a PhD in finance after completing a bachelor’s degree in electronic engineering, both at HKU. He is experienced in financial theory, data science, and machine learning. This essay was first developed during the SHC Writing Workshop.