Paper #903

Title:

Satisfaction in choice as a function of the number of alternatives: When "goods satiate" but "bads escalate"

Authors:

Elena Reutskaja and Robin Hogarth

Date:

November 2005 (Revised: May 2006)

Abstract:

Whereas people are typically thought to be better off with more choices, studies show that they often prefer to choose from small as opposed to large sets of alternatives. We propose that satisfaction from choice is an inverted U-shaped function of the number of alternatives. This proposition is derived theoretically by considering the benefits and costs of different numbers of alternatives and is supported by four experimental studies. We also manipulate the perceptual costs of information processing and demonstrate how this affects the resulting “satisfaction function.” We further indicate that satisfaction when choosing from a given set is diminished if people are made aware of the existence of other choice sets. The role of individual differences in satisfaction from choice is documented by noting effects due to gender and culture. We conclude by emphasizing the need to have an explicit rationale for knowing how much choice is “enough.”

Keywords:

Consumer choice, perception of variety, tyranny of choice, visual perception, cultural differences, Leex

JEL codes:

D12, M10, M31

Area of Research:

Behavioral and Experimental Economics

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