Are supermarkets doing their customers – and ultimately themselves – a favor by presenting dozens of varieties of honey, pasta, shower gel and other products that are almost indistinguishable from one another? And is it a good idea for a restaurant to offer their guests a menu the size of a novel?
Not really, according to the Paradox of Choice, a theorem formulated in 2004 by American psychologist Barry Schwartz. It looks like limitation of choices is needed to save us from ourselves. These thoughts were further developed in Cass Sunstein and Richard Thaler’s Nudge theory about choice architectures to be modified in light of human agents’ bounded rationality.
This was confirmed by a recent Caltech study and some of its precursors on the phenomenon of "choice overload," which happens when we are offered so many choices that they result in fatigue and disinterest. The same effect was found in Tinder users who grew “emotionally exhausted” by “swiping left” after a fairly short while. The impact of assortment size and variety on consumer satisfaction has been studied from a variety of angles.
And neuroscience shows that this effect is not limited to trivial little things like a menu. Caltech behavioral economist Colin Camerer points to the example of Sweden where, as part of a partial privatization of the social security system, people were offered a long list of private funds to invest their savings in for retirement savings; there were a few hundred funds overall. Absent a choice, investors were assigned to a default fund. Initially, close to 70 percent of eligible citizens participated in this selection. Ten years later, the rate had come down to one percent, which was not the program’s intention. But it reflects a very common reflexive reaction to (however) hard choices: taking the “safe” option.
To see what happens to the brain during a selection process, Camerer and his colleagues conducted an experiment. They had their subjects make decisions while they were being observed by functional magnetic resonance imaging while thinking – a method previously used in “localizing” brain activity involved in learning and choice. The scans revealed high activity in two regions: in the striatum where rewards are assessed by the researchers, and in the anterior cingulate cortex where costs and benefits are weighed against each other.
In this specific case, subjects could choose between different themes that would be printed on a personalized coffee cup for them. The selection included either 6, 12 or 24 different themes. The experiment showed that sample of 12 triggered the most intense brain activity.
Camerer’s interpretation of the results is that humans prefer a larger selection - but beyond a certain ideal size, the factor of time expenditure interferes. Apparently applying lessons from decreasing marginal utility, the brain concludes that the best of 12 is already pretty good – the best of 24 would not amount to such a big improvement anymore that doubling the effort would be worthwhile. The nature of mental effort and the cost of thinking are still poorly understood.
The study demonstrates that 12 is not a magic number but a consequence of the experimental setup. Still, Camerer believes that the order of magnitude is reasonably close: somewhere between 8 and 15 choices lies the golden mean. Individual factors would then determine what each individual case may look like.
The fact that we are still overwhelmed in the supermarket and elsewhere with an abundance of choices or even want to be overwhelmed is because "our eyes are bigger than our stomach": We appreciate a wide range of choices, at least at first glance, but only because, at this stage, we do not calculate how much effort the selection process will costs us. What this behavior can do has been shown in a previous study cited by the authors: in one store, customers were offered a stand with either 24 or just six varieties of marmalade for tasting. The table with the 24 varieties attracted significantly more interested parties, but the cash register told a very different story in the end: the probability that someone actually bought marmalade after tasting was ten (!) times higher at the booth with only six varieties as at the one with 24. It would be difficult to find more cogent arguments for limitation of choice.