The Paradox of Choice: Why More Is Less

by Barry Schwartz

People’s natural egocentrism makes it much easier to bring their own actions to mind than those of their partner. Because our own actions are more available to us from memory, we assume they are more frequent.

In general, dramatic, vivid causes of death (accident, homicide, tornado, flood, fire) were overestimated, whereas more mundane causes of death (diabetes, asthma, stroke, tuberculosis) were underestimated.

But while diversity of individual experience can limit our propensity to choose in error, how much can we count on diversity of experience? As the number of choices we face continues to escalate and the amount of information we need escalates with it, we may find ourselves increasingly relying on secondhand information rather than on personal experience.

any particular item will always be at the mercy of the context in which it is found.

framing. What determines whether a given price represents a discount or a surcharge?

It seems to be a fairly general principle that when making choices among alternatives that involve a certain amount of risk or uncertainty, we prefer a small, sure gain to a larger, uncertain one.

is the framing of the choice that affects our perception of it, and in turn affects what we choose.

The range of possible frames or accounting systems we might use is enormous.

In sum, just how well this $40 night at the concert satisfies you will depend on how you do your accounting. People often talk jokingly about how “creative” accountants can make a corporate balance sheet look as good or as bad as they want it to look. Well, the point here is that we are all creative accountants when it comes to keeping our own psychological balance sheet.

KAHNEMAN AND TVERSKY HAVE USED THEIR RESEARCH ON FRAMING and its effects to construct a general explanation of how we go about evaluating options and making decisions. They call it prospect theory.

The shape of this curve conforms to what economists have long talked about as the “law of diminishing marginal utility.”

Thus, Kahneman and Tversky point out, people tend to avoid taking risks—they are “risk averse”—when they are deciding among potential gains, potential positive outcomes.

Notice that the curve falls steeply at the beginning and then gradually levels off. This reflects what might be called the “decreasing marginal disutility of losses.”

What that means is that taking the risk to perhaps avoid losing anything is a pretty good deal. Thus, as Kahneman and Tversky again point out, people embrace risk—they are “risk seeking”—in the domain of potential losses.

There is another feature of the graph worth noting: the loss portion of the graph is much steeper than the gain portion.

Some studies have estimated that losses have more than twice the psychological impact as equivalent gains. The fact is, we all hate to lose, which Kahneman and Tversky refer to as loss aversion.

This is the dividing line between what counts as a gain and what counts as a loss, and here, too, subjectivity rules. When there is a difference in price between cash and credit at the gas station, is it a discount for cash or a surcharge for credit?

So fairly subtle manipulations of wording can affect what the neutral point is and whether we are thinking in terms of gains or losses. And these manipulations will in turn have profound effects on the decisions we make—effects that we really don’t want them to have, since in an important sense, discounts and surcharges are just two ways of saying the same thing.

Considering the random distribution, you would think that about half the people in the group would have gotten the object they preferred and that the other half would be happy to swap. But in fact, there are very few trades. This phenomenon is called the endowment effect. Once something is given to you, it’s yours. Once it becomes part of your endowment, even after a very few minutes, giving it up will entail a loss. And, as prospect theory tells us, because losses are more bad than gains are good, the mug or pen with which you have been “endowed” is worth more to you than it is to a potential trading partner. And “losing” (giving up) the pen will hurt worse than “gaining” (trading for) the mug will give pleasure. Thus, you won’t make the trade.

The endowment effect helps explain why companies can afford to offer money-back guarantees on their products. Once people own them, the products are worth more to their owners than the mere cash value, because giving up the products would entail a loss.

When they owned the mug, they demanded 30 percent more to sell it than they had said they would only a few minutes earlier!

One study compared the way in which the endowment effect influences people to make car-buying decisions under two conditions. In one condition, they were offered the car loaded with options, and their task was to eliminate the options they didn’t want. In the second condition, they were offered the car devoid of options, and their task was to add the ones they wanted. People in the first condition ended up with many more options than people in the second. This is because when options are already attached to the car being considered, they become part of the endowment and passing them up entails a feeling of loss. When the options are not already attached, they are not part of the endowment and choosing them is perceived as a gain.

Aversion to losses also leads people to be sensitive to what are called “sunk costs.”

Economists would tell us that the way to assess a situation like this is to think about the future, not the past.

people are susceptible to error even when choosing among a handful of alternatives to which they can devote their full attention. Susceptibility to error can only get worse as the number and complexity of decisions increase, which in general describe the conditions of daily life.

With many decisions, the consequences of error may be trivial—a small price to pay for the wealth of choices available to us.

Thus the growth of options and opportunities for choice has three, related, unfortunate effects. It means that decisions require more effort. It makes mistakes more likely. It makes the psychological consequences of mistakes more severe.

Finally, the very wealth of options before us may turn us from choosers into pickers. A chooser is someone who thinks actively about the possibilities before making a decision. A chooser reflects on what’s important to him or her in life, what’s important about this particular decision, and what the short-and long-range consequences of the decision may be. A chooser makes decisions in a way that reflects awareness of what a given choice means about him or her as a person. Finally, a chooser is thoughtful enough to conclude that perhaps none of the available alternatives are satisfactory, and that if he or she wants the right alternative, he or she may have to create it.

With a world of choices rushing by like a music video, all a picker can do is grab this or that and hope for the best.

CHOOSING WISELY BEGINS WITH DEVELOPING A CLEAR UNDERSTANDING of your goals. And the first choice you must make is between the goal of choosing the absolute best and the goal of choosing something that is good enough.

If you seek and accept only the best, you are a maximizer.

Maximizers need to be assured that every purchase or decision was the best that could be made. Yet how can anyone truly know that any given option is absolutely the best possible? The only way to know is to check out all the alternatives. A

As a decision strategy, maximizing creates a daunting task, which becomes all the more daunting as the number of options increases.

The alternative to maximizing is to be a satisficer. To satisfice is to settle for something that is good enough and not worry about the possibility that there might be something better. A satisficer has criteria and standards. She searches until she finds an item that meets those standards, and at that point, she stops.

The key point is that maximizers aspire to achieve that goal. Thus, they spend a great deal of time and effort on the search, reading labels, checking out consumer magazines, and trying new products. Worse, after making a selection, they are nagged by the options they haven’t had time to investigate. In the end, they are likely to get less satisfaction out of the exquisite choices they make than will satisficers. When reality requires maximizers to compromise—to end a search and decide on something—apprehension about what might have been takes over.

To a maximizer, satisficers appear to be willing to settle for mediocrity, but that is not the case.

The difference between the two types is that the satisficer is content with the merely excellent as ...

believe that the goal of maximizing is a source of great dissatisfaction, that it can make people miserable—especially in a world that insists on pro...

when all the costs (in time, money, and anguish) involved in getting information about all the options are factored in, satisficing is, in fact, the maximizing strategy.

the best people can do, all things considered, is to satisfice.

Maximizers spend more time than satisficers thinking about “roads not traveled.” Whole shelves of psychological self-help books testify to the dangers of this “shoulda, woulda, coulda” thinking.

Maximizers engage in more product comparisons than satisficers, both before and after they make purchasing decisions.

Maximizers are more likely to experience regret after a purchase.

Maximizers are more likely to spend time thinking about hypothetical alternatives to the purchases they’ve made. Maximizers generally feel less positive about their purchasing decisions.

you’re a satisficer, the number of available options need not have a significant impact on your decision making. When you examine an object and it’s good enough to meet your standards, you look no further; thus, the countless other available choices become irrelevant. But if you’re a maximizer, every option has the potential to snare you into endless tangles of anxiety, regret, and second-guessing.

people with high maximization scores experienced less satisfaction with life, were less happy, were less optimistic, and were more depressed than people with low maximization scores. In fact, people with extreme maximization scores—scores of 65 or more out of 91—had depression scores that placed them in the borderline clinical depression range.

What these studies show is that being a maximizer is correlated with being unhappy. They do not show that being a maximizer causes unhappiness, because correlation does not necessarily indicate cause and effect.

I believe that being a maximizer does play a causal role in people’s unhappiness, and I believe that learning how to satisfice is an important step not only in coping with...

If you’re a satisficer and you choose something that’s good enough to meet your standards, you are less likely to care if something better is just around the corner.

You can generate if only’s indefinitely, and each one you generate will diminish the satisfaction you get from the choice you actually made.