There was a famous experiment by Sheena Iyengar where supermarket customers were offered to try jams--e.g., orange, grapefruit, peach, strawberry, pineapple, etc.--and then to buy them at discounted prices. In one set of stores they were offered a relatively small number of types of jams, I think it was eight. In the other set of stores, they were offered 25 different jams. The stores offering eight types of jams had much higher sales.protagonist wrote:Couldn't that simply be because they don't UNDERSTAND what they are choosing between because they don't understand enough about investing and are thus intimidated by more CONFUSING choices? Restaurant choices are simple. I doubt you would find people walking out of restaurants because they have to choose between orange, grapefruit, peach, strawberry or pineapple juice rather than just having orange juice on the menu.VictoriaF wrote:Even if the quality of food does not improve, when people face fewer options they are more likely to get engaged. This is quintessential behavioral economics, in contrast with standard economics where having more choices is always better. One of the most important related findings is that when a 401(k) plan offers too many investment options, fewer people contribute to 401(k). Regardless of the fund choices, it's usually advantageous to contribute to 401(k) up to the company match, and people forgo this benefit simply because there are too many options.
Skepticism is good, but it should be applied not only to what the others state but also to your own intuition. I am fascinated with behavioral economics, because it turns a lot of common logic on its head and demonstrates it with creative experiments and statistically significant, academically acceptable results.protagonist wrote:I'll have to check that link out when I have time. I can't believe that more options per se make us less happy. There are so many potential confounding variables.VictoriaF wrote:More generally, increased choices reduce happiness. See, for example, Eric Barker's recent blog post How To Find Happiness In Today’s Hectic World.
Barry Schwartz's book The Paradox of Choice is monumental. The research he cites, including that by Sheena Iyengar, is solid. Eric Barker's linked blog post is a quick way to grasp these ideas about choice: it's far shorter than the book or academic papers but more comprehensive than a message I could compose in this Forum.
Barker covers many topics I find interesting. His posts are well structured, concise but comprehensive, provide links to the source materials (books, academic papers, TED and YouTube videos), and include summaries of the key concepts. Do check him out.