Sometimes what we think we need is more options. And in this day and age our options seem pretty limitless. So we think we have it pretty good. But this comes with challenges. This is what Barry Schwartz refers to as the ‘paradox of choice’ – sometimes having too many options leaves us crippled with anxiety and we don’t know what to do. I know this has certainly impacted on me. When we can do absolutely anything, what should we do? I summarise my key takeaways from the book below.
- Figure out your goals
- Evaluate the importance of each goal
- Array the options
- Evaluate how likely each of the options is to met your goals
- Pick the winning options
- Consequences of choice to modify your goals & how you evaluate your options
Knowing your goals: what do I want?
Based on ‘expected utility’
(Experiences utility – past experiences)
We base our memory on peak (pos or neg) and end
Discrepancy between logic and memory – we don’t always know what we want
Bandwagon effect – everyone sees the same (potentially biased) news and shares it increasing the chances of others hearing it too
Anchoring – comparison with higher price (on sale items, or comparison to a more expensive priced item)
Framing – discount vs surcharge – customers prefer discounts, e.g. shipping included vs added shipping even though they are the same price
Risk & reward – we prefer a small sure gain to a large uncertain one. But we’ll risk a large loss to avoid a small one.
Diminishing margin utility
Feel great winning the first $100 but after that you feel less and less increased satisfaction for additional wins
Starting at neutral, 1 win is “good enough” and additional wins diminish in marginal gains
The endowment effect
Pickers vs choosers
Maximiser – need to check out everything to make sure they’re making the best decision (this is me!)
Satisficer – settle for good enough, don’t worry about finding something better
Satisficers can become maximisers when there is too much choice
Perfectionists are not happy with “good enough” when they know they can do better
Choice and freedom is important for happiness
BUT, too much choice becomes overwhelming
Loyalty & commitment vs choice (relationships with others – staying friends or in a relationship out of loyalty rather than choosing the person every day)
Presence of a clearly inferior alternative provides an anchor (this is also a sales technique)
Learning to choose well is hard
Keeping options open has negative psychological consequences
Regret, omission bias
Bronze medalists are happier than silver medalists
Adaptation – we get used to things and take them for granted
Autonomy – choice & responsibility – but also blame, sole responsibility
We get what we want but discover what we want doesn’t satisfy us (time saving devices, but have no time)
Too many choices produces psychological stress – have the best of everything, comparison to others, regret, status
Steps:
1 choose when to choose (cumulative effect of too many choices) it’s the subjective results of decisions, process makes you feel worse. Reduce number of choices to only 2.
2 be a chooser not a picker. New opportunities. Modify goals. Make decisions automatically. Avoid following herd. Create your own better options.
3 satisfice more, maximise less. “Good enough”
4 opportunity cost of opportunity costs. Limit thinking time of features of options you didn’t choose. Don’t worry about missing out.
5 make decisions non reversible. When we can change our mind, we are less satisfied with our decisions.
6 attitude of gratitude. Reflect on how much better things are than they might be
7 regret less
8 anticipate adaptation. Realistic expectations about how experiences change over time. Learning to be satisfied when luxuries turn to comforts. Gratitude helps with the satisfaction treadmill.
9 control expectations
10 curtail social comparisons. What makes YOU happy
11 learn to love restraints. View limits as liberating. Follow rules.
