The Paradox of Choice

Supermarkets are unusual as repositories for what are called “nondurable goods,” goods that are quickly used and replenished. So buying the wrong brand of cookies doesn’t have significant emotional or financial consequences. But in most other settings, people are out to buy things that cost more money, and that are meant to last. And here, as the number of options increases, the psychological stakes rise accordingly.

As the rich get richer, each additional unit of wealth satisfies them less.

When the possibilities involve losses, however, we will risk a large loss to avoid a smaller one. For example, we will choose a coin flip that determines whether we lose $200 or nothing over a sure loss of $100.

we prefer a small, sure gain to a larger, uncertain one

Even if companies sell almost none of their highest-priced models, they can reap enormous benefits from producing such models because they help induce people to buy their cheaper (but still extremely expensive) ones.

One high-end catalog seller of mostly kitchen equipment and gourmet foods offered an automatic bread maker for $279. Sometime later, the catalog began to offer a larger capacity, deluxe version for $429. They didn’t sell too many of these expensive bread makers, but sales of the less expensive one almost doubled! With the expensive bread maker serving as an anchor, the $279 machine had become a bargain.

Nonetheless, when products are essentially equivalent, people go with what’s familiar, even if it’s only familiar because they know its name from advertising.

Yet several studies have demonstrated that “familiarity breeds liking.”

According to James Twitchell, the key insight that has shaped modern advertising came to cigarette manufacturers in the 1930s. In the course of market research, they discovered that smokers who taste-tested various cigarette brands without knowing which was which couldn’t tell them apart. So, if the manufacturer wanted to sell more of his particular brand, he was either going to have to make it distinctive or make consumers think it was distinctive, which was considerably easier. With that was born the practice of selling a product by associating it with a glamorous lifestyle.

So the second group experienced the same moment-by-moment discomfort as the first group, with the addition of somewhat lesser discomfort for twenty seconds more. And that is what they reported, moment-by-moment, as they were having the procedure. But a short time after it was over, the second group rated their experience as less unpleasant than did the first. Whereas both groups had the same peak experience, the second group had a milder end experience.