Making Choices

What is choice overload? Why does this occur and what are consequences of choice overload?

Choice overload, also known as overchoice, refers to a situation whereby consumers are overwhelmed with choices. It is a common problem in the postindustrial society and has been attributed to technological advancement. Following the Industrial Revolution, consumers are being offered more products, resulting in more choices. Despite the fact that the availability of more choices may appear beneficial, there is an underlying problem associated with having several options, which poses a significant challenge with respect to making an optimal choice. Choice overload has been associated with indecisiveness, unhappiness with the choice, and sometimes consumers desisting from choosing. When consumers are presented with more options to choose from, the freedom that comes with more alternatives tends to limit ones options. In most cases, consumers make decisions without having performed adequate research regarding the available choices, including the advantages and disadvantages associated with each choice. Therefore, when a person without adequate information is faced with many options to choose from, he/she may opt to desist from choosing at all, even if choosing is likely to result in a better outcome. It has been reported that an increase in the choices results in slow decision-making; this is evidenced by the fact that an increase in the available choices reduces the likelihood of making a purchase. In addition, choice overload results in procrastination, whereby people are likely to defer making a choice even in circumstances when refraining from making a choice is not in their best interest. Overchoice can also affect decision quality in the sense that it increases the likelihood of making bad decisions since people in choice overload situations may sacrifice quality. Choice overload also reduces satisfaction with ones choice, since the decisions made are objectively superior.


Discuss the problem in choosing retirement funds. Why does Dr. Sheena Iyengar suggest that too many choices in retirement funds leads to people not choosing even when choice is in a persons best interest?

Dr. Iyengar and her colleagues studied the retirement saving decisions made by about 800,000 people from about 650 retirement saving options available in the United States. They sought to determine whether the number of retirement saving plan offerings affected the probability of people saving for the future. They reported a correlation between the participation rate (probability of people making savings for the future) and the number of offerings. Specifically, they reported a negative correlation between the plan participation rate and the number of plan offerings, which implies that more plan offerings reduced the participation rate, which is consistent with one of the outcomes of choice overload refraining from making a decision. Furthermore, Dr. Iyengar and her colleagues found out that for those choosing to participate (choosing a retirement savings plan), there were negative consequences related to being presented with more options to choose from. For instance, when presented with more options, participants were more likely to make investments in money markets than in stocks, a choice less likely to be recommended by financial experts. Again, this is consistent with the consequences of providing people with more choices in the sense that choice overload reduces the quality of the decision made. Therefore, one would expect that if people are provided with more retirement options, they are less likely to make sound financial decisions. The underlying inference is that many people are not in a position to make good asset allocation decisions when they are provided with several options to choose from. Overall, the outcome of providing people with many asset allocation options is that they are likely to postpone making the choice, and for those who make the choice, they are likely to make worse financial decisions. This is because people are often incapable of comparing and contrasting the various options before choosing from a several available choices.

Discuss Dr Iyengars 4 techniques to apply to choice overload.

The four techniques to apply in choice overload situations include cut, concretize, categorization, and condition for complexity. The first technique cut deals with the elimination of redundant options. This technique is based on the assumption that less is more. Providing consumers with fewer options increases the choosing experience and enables the customer to tell the differences between the available choices. The second technique concretize makes sure that the outcomes associated with the choices are more concrete. Comprehending the differences between the available choices requires people to have an understanding of the different consequences associated with the various choices. In addition, these consequences have to be communicated in a vivid manner. The third technique categorization is based on the premise that people are capable of handling more categories than choices. In this regard, categories can assist people to differentiate the available choices. In addition, categories have to communicate something to the user. Categories reduce the number of options presented to the customer and result in an enhanced choosing experience when compared to presenting customers with more options that are not grouped. The fourth technique condition for complexity deals with increasing complexity in a gradual manner. This means that questions containing fewer choices should be asked first whereas questions presenting the most choices ought to be asked last. This technique is suitable for complicated decisions whereby consumers are supposed to make different decisions for a single choice. An example of a complicated decision is buying a car whereby customers are supposed to make choices relating to color, engines, gearshift, interior and tires among others. In such complicated decisions, information has to be presented in such a way that complexity increases gradually in order to ensure that the customer is engaged (Iyengar para. 10).

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Discuss a decision where there are simply too many choices to choose from (e.g., choices on a Diner Menu (why are they 20 pages long?), paint colors, etc.). How could you use the 4 techniques to apply to choice overload to make choices easier?

I was presented with too many options to choose from in a movie shop. I went to purchase a movie although I had no specific title or genre in mind. I was presented with over 100 movie titles to choose from. Using the cut technique when presented with choice overload, I can filter out movies with the same actor in the sense that I can reduce my options to one movie per actor. In addition, I could opt to reduce the options by setting the criteria to be based on the year of release, whereby I could choose movies released from 2010 onwards. With respect to the concretize technique, I could sample movie trailers in order to determine which movie would best suit my preferences. This could help me know what I could expect if I purchased a movie after going through its preview. With respect to categorization, I could categorize the available movie titles based on either genres or actors; this could help in reducing the choices based on the categories. For instance, I could prefer an action movie; this would make it much easier to choose from the movie titles listed under action genre instead of going through all the remaining choices for an action movie. Regarding the fourth technique condition for complexity my choice would be guided by considering the genres that have the lowest number of movie titles as I progress towards genres that present the highest number of movie titles.

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