Copyright: 2004
Publisher: Harper Perennial
ISBN: 0-06-000569-6
In The Paradox of Choice: Why More Is Less, Barry Schwartz takes us on an interesting journey through the psychology of choice. Decision theory is an interesting field with many spurs and side-tracks, a number of which Schwartz takes us down. The book covers a lot of ground but manages to stay on theme, namely: too much opportunity for choice is not necessarily a good thing.
Why is choice good? How can it be bad?
Schwarts points out clearly that freedom means choice. When our choices are limited our freedom is limited. Many people feel that the corollary is that unlimited choice must mean unlimited freedom. Schartz argues however that too many choices can actually limit our freedom.
While he doesn't necessarily articulate it this way, ultimately his argument comes down to the fact that our time is a finite and limited resource. Since making a decision between multiple options takes time and time is a finite resource, having unlimited choices reduces the amount of time we have to do other things.
Of course Herbert Simon studied this concept when he came up with what he termed "satisficing". Schwartz builds on that theme and contrasts satisficers with maximizers throughout the book. Satisficers are those who are willing to settle for "good enough" whereas a maximizer must have "the best".
Jam Choices
Throughout the book, Schwartz does an excellent job of bringing in the data from experiments without making the book a dry read. One of the interesting experiments he mentioned was a jam tasting experiment. The researchers set up a table in a grocery store with an array of jams set up that customers could taste. After tasting a number of jams, each customer was given a coupon to buy one of the jams that they had just tasted.
We often think that it's easier to choose from a wider variety since obviously if we have 24 varieties to choose from, surely we can find one of them that we like. If we only have 6 varieties, we aren't as likely to find one that we like. Interestingly, the people who were faced with an array of only 6 jams were far more likely to buy when asked to choose. In fact 30% of the sample bought a jar as opposed to only 3% of the sample that was faced with 24 choices.
Why would this phenomenon occur? Schwartz explores many different concepts in the book. One of them is the idea that we often regret choices not made. So when we are faced with 24 varieties, we have 23 jams that we have to choose not to buy. With only 6 choices, there are only 5 possible choices to regret. This is just one of many ideas like it that Schwartz explores in the book.
Utility and Adaptation
Schwartz explores three different types of utility in his book:
- Expected utility
- Experienced utility
- Remembered utility
When expected and remembered utility don't match up with experienced utility, we can experience regret for our choices. Even experienced utility can lead us astray however. Psychologists explore a concept called adaptation. Adaptation is what happens when we get used to something. A simple example is walking into an air conditioned house on a hot day. Immediately it feels refreshing and cool. After a while however, you don't notice the "refreshing" part and it might not seem quite as cool. This is adaptation.
Availability Heuristic
When we think back on experiences to determine how good they were, we use what is called the availability heuristic. This heuristic means that we assume that the more available something is in our memory, the more frequently we must have encountered it in the past.
Reality tells us though that salience or vividness of memory can actually make a memory more available. This is important to remember in software development. Software can work perfectly 1,000 times but if the one time it fails, the user has a horrible experience, that is the experience they will remember.
Framing and Prospect theory
Setting the reference point for an experience is important for what is known as framing. When a gas station advertises a "3% surcharge for credit" and the one down the street advertises a "3% discount for cash", more people will choose the discount station even if the end price is the same.
One reason for this is the underlying ideas of prospect theory. Prospect theory says that if you are faced with a sure $100 or a 50/50 chance for $200 (or nothing), you will most often choose the sure $100. On the other hand, if you are faced with a sure $100 loss or a 50/50 chance at losing $200 (or nothing) you will most often choose the 50/50 chance.
Why? Because subjectively, the feeling of getting $200 is not twice as good at getting $100. On the flip side, losing the first $100 is the worst, possibly losing $200 is not twice as bad. We tend to be risk averse on the positive side, we tend to be risk seekers on the negative side. In other words, we prefer sure gains over risky gains; we prefer risky loss to sure loss.
Ultimately, people dislike bad things more than they like good things. The shape of the subjective / objective satisfaction curve suggests this as well as the fact that satisfaction is not a linear function.
Endowment Effect and Assessed Value
When we feel we own things, we are very loathe to give them up. The idea relates back to the underpinings of prospect theory because it hurts more to give something up than it felt good to gain it in the first place. In one experiment, people were asked to place a price on a coffee mug that they inspected. Shortly thereafter they were actually given the mug and then given the opportunity to sell the mug. The price they demanded for the mug was 30% higher than the price they had just placed on the mug!
One component of this is the trade-off effect. When someone is forced to actually make a choice, rather than simply assessing a situation, trade-offs must be made. When you assess a situation objectively you don't always consider the trade-offs that would need to be made. When faced with and forced to make a choice, you have to face up to the trade-offs.
Attributional Style
When things work or don't work, we can accept the praise or place the blame in a number of ways. There are three key dimensions that we can assess success or failure:
- Global - Specific
- Chronic - Transient
- Personal - Universal
When you choose to view bad things as global, chronic and personal and you view good things as specific, transient and universal, you are very likely to slip into depression. You will feel like you can't do anything right and everything will always be wrong for you.
The flip side of course is that you can view the world in the opposite fashion and be very likely to be more happy.
Conclusion
This is a pretty short book, but it packs of a ton of information into it's small size. Schwartz has some obviously liberal tendencies which show up in some of his commentary but for the most part the book is a very practical look at some of the issues of decision theory. It is written for laymen but still has quite a bit of depth as it is a well-researched book.