Theory suggests more choice is a good thing, but this underestimates the emotional and cognitive toll of evaluating multiple options. In Kevin Brilliant’s latest column, the Chicago Bulls’ senior manager of business strategy & analytics explains choice paralysis
Eight years ago, long before I joined the NBA community, I interviewed with another North American sports organisation for a business strategy and analytics role. At the time, dynamic ticket pricing dominated the collective mindshare of sports analytics functions, and as I listened to the officials outline their roadmap for the future, one comment stood out to me most:
“Eventually with analytics, we’ll get to a point where if a stadium has 50,000 seats there will be 50,000 unique prices; every seat will be its own unique option.”
From an analytical perspective this made sense; each seat in a stadium offers a slightly different experience, so why not lay out all the options and price them accordingly?
It wasn’t until years later when I studied behavioral economics that I would come to understand what a misguided – and costly – notion this truly was.
One of the foundational studies in behavioral economics centres on the concept of choice paralysis.
In a famous experiment involving the sale of jams in supermarkets, researchers set up two conditions: In one condition, they offered shoppers a choice of 24 different flavours of jam; in the other, they reduced the number of jam options to six.
Perhaps counterintuitively, not only did shoppers buy more jams when they had only six options, but they were overwhelmingly more satisfied with their choices.
The psychological basis for this effect comes from a behavioral economics principle known as regret and counterfactuals: the tendency to imagine how a situation could have played out differently, and the ensuing regret that comes from imagining unrealized outcomes.
In the jam experiment, not only did scaling-back the number of options reduce the mental effort required to make the decision, but it also helped mitigate the tendency toward counterfactual thinking.
As a result, those shoppers were happier with their selection than the group that chose from a broader set of options.
Rational economic theory would say that including more options always benefits the chooser or, at worst, has a net-neutral effect – if the option is undesirable, it’ll simply be discarded by the decision-maker.
In practice there’s both a cognitive and emotional cost to evaluating options. As human beings, we generally prefer the path of least resistance and will go to great lengths to avoid the possibility of regret, even foregoing “good” decisions out of fear that there’s a “best” decision we haven’t yet considered.
Contributing to our choice paralysis is the fact that we don’t always make decisions with the same objectives or set of criteria in mind. While we might assume people strive to make optimal choices, this isn’t always the case. In the 1950s, Nobel prize-winning psychologist Herbert Simon coined the terms “maximisers” and “satisficers” to describe two alternative mindsets under which people make decisions.
Consider scrolling through your music library. You flick through the list of songs, until finally you happen upon one that you particularly like. Just before you hit “play”, a nagging thought creeps into your head: what if there’s another song – a better song – that I haven’t gotten to yet?
You keep scrolling.
Before long, you reach the end of your library in a state of disappointment and disbelief: wow, there is nothing on here that I want to listen to.
Under these conditions, your complete control over the process gives rise to a maximisation mindset – you are literally searching for the perfect song. Consider how dramatically your overall mindset shifts when, instead of flipping through your library, you tune into a radio station.
Aside from selecting the station, what comes on next is outside of your control. Suddenly, there are hundreds of songs – the same ones you skipped past while searching your music library – that if played on the radio would make you think: Great choice!
This is the hallmark differentiator for the “satisficers”: you’re no longer looking for an ideal option, you’re looking for an option that meets a baseline set of criteria; as soon as an option satisfies that criteria, the decision-making process is complete.
Virtually everything we do in life is based on an appeal to someone’s psychology: every interaction, every date, every working relationship, everything we do from a marketing and sales standpoint.
Failing to understand the underlying principles of that psychology opens the door for businesses to inadvertently create negative customer experiences without even realizing it.
In behavioral science, there is no better example of this unintended consequence than when it comes to our general understanding of how best to offer people choices. We’re very aware of the hard costs we impose on customers but we spend too little time accounting for the mental costs we impose when we ask them to make decisions.
The more we expand the decision set, the more we imply there’s a “right” or “best” choice to be made. In doing so, we move customers from a search for a satisfactory option to a search for an optimal one, laying the groundwork for choice paralysis, decision avoidance and regret.
It may feel intuitive to believe your economist friends when they tell you that more options always benefit the decision maker, but do your customers – and your business – a favor: keep it simple. When it comes to offering your customers choices, sometimes “good” is “good enough”.
Follow Kevin on Twitter: @KevinBrilliant7
This article features in SportBusiness International’s 2018 Fan XP report. Browse the sections of the report or download the full PDF document here.