Everything You Need to Know about the Psychology of Choice
In this article, you will learn about 1) an introduction to choice and the psychology behind it, 2) debunking the psychology of choice, 3) bias and choice, and 4) why it is so hard to make a choice for most of us.
We live in an age where we have a plethora of options to choose from in every aspect of life. In previous generations, this was never the case because people had a limited number of options to choose from. Now before we move on to understanding the psychology of choice, let us think long and hard on what the word ‘choice’ actually means.
The best definition so far that captures the essence of the psychology of choice is that ‘choice is the purest expression of free will’. Today, we get to choose anything that helps us in shaping our lives exactly how we want, provided we have ample resources. In order to better understand the psychology of choice, let us look at a real-life example.
Suppose, you are looking for a suitable life partner but all the suitors you have met so far have failed to impress you. Disappointed, you join an online dating website and suddenly a magical world opens up to you where you have the ‘option’ to choose someone you like. This magical world that you were once unaware of suddenly becomes a reality and that is when you realize that the possibilities are endless.
But having so many options available becomes more of a bane than a boon at times. Take e-commerce websites, for example. There are so many online shopping websites where you can get your hands on anything – from apparel for men and women, to shoes, electronics, and even bath, home and kitchen products. The list of items is so exhaustive that it would take you hours before you could decide what you want to buy.
No matter how many filters you use, it is still hard for you to make up your mind about what exactly you want to buy. This delay in the process of decision-making would not have occurred if the options to choose from were limited. One of the reasons why you tend not to buy anything at all when you are presented with so many options in one go is because it leads to indecision.
Now you may be wondering if having a choice is actually a good thing since it causes a delay in the decision-making process when it comes to buying. This paradoxical phenomenon is discussed by Professor Sheena Iyengar in her book The Art of Choosing.
There were two sampling stations at a grocery store, where customers could choose from 24 and 6 flavors, respectively. The results showed that customers who had only 6 flavor variants were better at selecting a jam flavor, and the conversion rate translated into more than 30%. While on the other hand, customers who had to choose from 24 flavors were indecisive, resulting in a 3% conversion rate.
Although the larger assortment of 24 flavors attracted more customers, the limited selection range consisting of 6 flavors generated more sales. If you are confused about the reason for the delay in the decision-making process when presented with a wide array of options, here is what you need to know.
The reason behind all this is linked to human psychology. Choosing wrongly is what we fear when so many options are thrown at us. This is why we cannot arrive at a decision easily. This phenomenon can be explained mathematically as well. When we have two options, there is a 50% chance of selecting the right option. Likewise, if we have five options, the chance of selecting the right option falls to 20%.
The situation becomes more complicated when the options increase to more than 20. However, there are other reasons that contribute to this situation, too. Human cognitive limitations and time constraints also play a part in bringing the decision-making process to a halt because we fail to differentiate and distinguish between so many options.
Another aspect that plays a role in the selection process is the ever-changing reference point. Whenever a new substitute is introduced, the point of reference changes automatically and creates a new perspective in the minds of the customers. This TED presentation with Sheena is worth watching.
DEBUNKING THE PSYCHOLOGY OF CHOICE
Now that we have some basic knowledge about the different factors that contribute toward the decision-making process when buying products, let us move on to debunk the psychology of choice in more detail.
Origins of Choice Theory and What It States
Choice Theory: A New Psychology of Personal Freedom published in 1998 is widely read by and taught to those who want to understand the psychology of how choice affects us. Here are some key takeaway points that you must focus on:
- All that humans do is behave.
- The behavior exhibited by humans is chosen.
- All humans are genetically driven to satisfy their five basic needs – survival, love and belonging, power, fun, and freedom.
The three points above capture the essence of Choice Theory, and when coupled with the Seven Caring Habits, it replaces external control psychology and the Seven Deadly Habits. The present psychology of people in almost all parts of the world is external control, which is destructive to relationships.
When this mindset of external control is used, it destroys the ability of individuals to achieve satisfaction. This leads to discord between the two and gives rise to problems like violence, crime, spousal abuse, mental illness, and drug addiction. The ten axioms of choice theory are also discussed below:
- We can only control our own behavior – no one else’s.
- We can only give information to another person.
- All long-lasting psychological problems are linked to relationship problems.
- Our relationship problems are part of our present lives.
- The past shapes us into the individuals we are today. However, we can only satisfy our needs and keep satisfying them in the future.
- We satisfy our needs by keeping in mind the pictures of our Quality World.
- Humans can only behave.
- Acting, thinking, feeling and physiology make up total behavior.
- The entire behavior is chosen by the individual, but only acting and thinking can be controlled, while feeling and physiology can be altered indirectly by controlling the acting and thinking components.
- Total behavior is explained by verbs and named by the part that is most easily recognizable.
What Is a Bias?
According to the Merriam-Webster Dictionary, bias is defined as an inclination of temperament or outlook; especially a personal and sometimes unreasoned judgment. Now you may think that women choose their nail polish colors simply by judging the color, but things are not that simple. The name of the shade is equally important when it comes to picking a nail polish color, and this is how our preference changes. This, ladies and gentlemen, is called a bias.
Do Biases Matter?
Some biases are conscious, while others are unconscious and often termed as implicit bias. If you prefer dogs to cats simply because they are more lovable and less likely to scratch, it is a conscious bias. While on the other hand, implicit bias is hard to explain because we do not know the reason behind our preference. For instance, you do not know why you like red more than blue. Implicit bias is something that greatly affects the way we behave and how we treat others to an alarming extent.
BIAS & CHOICE
Did you know the human brain is capable of billions of calculations per second which means it packs more power than any other computer in the world? Even though this is true, there are some logical fallacies and cognitive biases that often get in the way when we are trying to make a decision.
The hitches in our thinking that lead us to make rush decisions with erroneous conclusions come under cognitive bias. It can best be described as a flaw in judgment that results from errors in social attribution, memory, and miscalculations. Logical fallacies like ad hominem, circular arguments, slippery slopes, etc. can be explained as errors in logical argumentation.
It is believed by social psychologists that these biases usually affect our choices leading us to make serious mistakes. Here are some biases that you must know about:
- Gambler’s fallacy is more of a hitch in our thinking that makes us put more pressure on previous events with a belief that they will influence the events that take place in future.
- The inability of humans to properly grasp a clear sense of peril and risk is called neglecting probability. This essentially is what makes us give too much weight to the risks of comparatively harmless activities while forcing us to overstate the highly dangerous ones even more.
- The observational selection bias is what makes us notice things that we did not notice before. It is a cognitive bias that makes us feel as if the appearances of certain events or things are not coincidences even though they are.
- ‘If it ain’t broke, don’t fix it’ is how we can describe the status-quo bias in one sentence. The status-quo bias is what powers our conservative tendencies.
- The negativity bias, on the other hand, makes humans perceive bad news as more profound or important. This is why we feel that negative news are more credible because we are suspicious creatures from the beginning.
- The need to go with the flow is backed by the bandwagon effect. The bandwagon bias is linked to the undying need of individuals to fit into a particular group of people and feel socially accepted.
- The projection bias makes us think that all people think like us and agree with our views while that is not true. This cognitive inadequacy often makes us overestimate and suppose that a consensus exists on matters where there may be none.
- The current moment bias exists because we find it difficult to imagine the future and to alter our expectations and behaviors accordingly.
- Humans have a tendency to compare and judge a limited set of things. Therefore, the anchoring effect makes us fixate on a number or value that is weighed against everything else.
Priming and Behavior
In psychology, priming refers to the exposure to one stimulus and the response to another stimulus. Priming is usually linked to language recognition. Many studies have shown stereotypes regarding innate ability linked to gender and race having a great impact on standardized test performance. One such study, conducted by Claude Steele and Joshua Aronson, showed that African American students had an unsatisfactory performance on the GRE verbal exam when they were told that the test would be used to measure intellectual abilities.
Priming & Choice
Most experts are still baffled by one thing – why do some people choose a particular product or service while others blatantly decline even though they seem to be the perfect candidates for it? Why do some people who do not even belong to the target audience group buy the product or service?
Now here is the thing about priming and choice – if the priming causes people’s performance to suffer, when a conscious choice is involved, people will prefer the option for which they have a positive implicit bias. Right from the start, we are taught to prefer high-quality products, which is why we often tend to go for products that boast the ‘superior quality’ tag.
It is also important to understand that people tend to associate quality with modernity and price. The main downside with making such associations is that they can easily overrule the quality of the products we choose between.
Anchoring Bias & Choice
We humans tend to anchor our decisions based on the first piece of information that reaches us. For instance, you normally buy shampoo for $10, but if you see that it is on sale for $8, you will instantly grab it because it seems like a great deal. However, if your friend goes to another high-end store where the same shampoo is being sold for $12, she will react in the same way if she sees that the same shampoo is being offered to customers at $10.
In-Group Bias & Choice
The in-group bias is also termed as the bandwagon effect and can best be described as ‘When in Rome, do as the Romans do.’ A person in a particular group will act in the same manner as the other members of the group. He or she will try to align his or her likes and dislikes with that of others so as to ‘fit in’.
This type of bias usually occurs in groups that are formed around affiliations pertaining to sports, religion, or politics.
Framing Effect Bias & Choice
The framing effect bias occurs when choices are presented to us in a way that affects how we perceive them – either as a gain or loss. People are more likely to avoid risk when a positive frame is presented, while more people will take risks if a negative frame is presented. This cognitive bias has a profound effect on people when it comes to making investments.
Loss Aversion Bias & Choice
No one likes to miss or lose things – it is only natural to desire the best of the best of everything. The loss aversion bias makes us feel more strongly toward avoiding a loss rather than receiving a gain. This forms a basis for understanding the endowment effect in which we tend to prefer things we already own as compared to the things we do not.
Current Moment Bias & Choice
Most of us would prefer to feel pain today than feel the same tomorrow because it is not easy for us to imagine ourselves in the future and set expectations accordingly. The current moment bias is closely studied by economists because it usually revolves around people’s willingness to save and not overspend.
Confirmation Bias & Choice
We tend to be put off by those people who do not have the same opinion as us on different matters. This simply explains the confirmation bias because we are more likely to be friends with those who are similar to us and share the same opinions as us. The confirmation bias was also referred to as cognitive dissonance by psychologist B.F. Skinner.
Post-Purchase Rationalization & Choice
When you buy something that was totally unnecessary, overly expensive or faulty, you tend to rationalize the purchase by convincing yourself that it was necessary, and it was a great idea all along. That is what post-purchase rationalization, or Buyer’s Stockholm Syndrome, is all about, because we subconsciously justify our purchases, especially the pricey ones.
Decoy & Choice
Also known as the asymmetric dominance effect, the decoy effect is the phenomenon whereby customers tend to have a specific change in preference between two options when a third new option is presented with asymmetric dominance.
Different Presentation of Choice
The ways in which choices are presented to us do make a difference in the selection process. Presentation presents a different challenge to theories of choice based on preferences because the two alternatives will be chosen by the customer based on how they are presented to them instead of on the properties of the alternatives only.
It is important to understand that the sensitivity to choices depends on how they are framed because it can be interpreted as suggesting that different presentations begin different choice processes that in turn result in different choices.
WHY IS MAKING A CHOICE SO HARD FOR MANY OF US?
Commonly known as overchoice, choice overload is a cognitive process in which the individual is unable to arrive at a decision simply because there are too many choices to consider. Given, a wide array of choices will definitely attract customers because having many options to choose from is desirable for most of us. However, the main problem occurs when these exhaustive choices inhibit customers from making a purchase.
The paralysis in the selection process occurs because we are not able to differentiate between the variants. The choice is delayed, and the individual enters a phase of procrastination. The decision quality of the individual also degrades considerably when they are presented with too many options.
Choice Backed by Willpower
We make thousands of decisions every day – consciously and unconsciously. As we keep making more and more decisions in a day, it takes a toll on our willpower and eventually, we start looking for an easier way out of the everyday humdrum. Due to this, sometimes we tend to make decisions on impulse without a second thought or we simply choose to do nothing due to fatigue.
Simply put, the more decisions you make, regardless of whether they are simple or complex, the less mental energy you will have to make proper decisions.
What You Should Do to Simplify the Decision-Making Process for Your Customers
- Do not come up with an exhaustive list of product variants that will result in cognitive overload.
- Each product should have a distinct and detailed product description so that the customer knows exactly what is being offered to him or her.
- Create different categories and filters that will ease the selection process.
- You can also ‘recommend’ different products that cater to different needs to simplify the selection procedure for customers.
Now that you know how the psychology of choice works, it will be easier for you to understand how we make choices and the different biases that influence our choice. It will also be easier for you to make the right decision when it comes to buying products and services the next time around. Understanding the psychology of choice will also help you as a marketer to make your products or services more accessible to your target audience.
During our interview trip in Spain, we interviewed Diego Cabezudo - CEO and co-founder of …
In San Jose (CA), we meet CEO & Founder of Ensighten, Josh Manion. Josh talks about his story how he …
As an entrepreneur, you might find the whole idea of finding financing for your business as a …