A quick drop-in to your local superstore to pick up a few essentials inexorably stretches into thirty minutes, then an hour, as you stand in front of unending walls of similar products. Likewise, health insurance and financial retirement plans present a seemingly limitless number of options. Research has suggested that increased choice sets may not be beneficial to decision makers. A new study shows that we are often not the best judge when it comes to choosing the method of our own decision making.

Previous studies have demonstrated that—from shopping to serious decisions such as healthcare plans—a multitude of options can lead to choice overload.  The results are reduced decision quality, more indecision—and greater regret. New research conducted by Tibor Besedes in the School of Economics, along with Cary Deck, Sudipta Sarangi, and Mikhael Shor, examines decision-making through the proposition that it is possible to improve decisions people make without reducing available alternatives.

This possibility was examined through the use of different sequential choice architectures which were compared to subject preference of architecture. Interestingly, most people chose the least effective way of making choices, using a sequential elimination approach in which a previously selected option was compared to a new subset of options. Most tended to stick with their original choice, causing them to undervalue new options.

Similarly, the architecture that was least-chosen improved the quality of decision making. This was a sequential tournament process: options are placed into subgroups and then “compete” at each level until the final set in which the ultimate decision is made. Subjects who did the best when using the sequential tournament method were even more likely to prefer simultaneous choice.

Implications

So what does this mean? Primarily, we are probably not the most effective evaluators of the quality of our own decisions and thus err in selecting a method of choice. A potential way to mitigate indecision and regret after choosing an option without restricting a choice set is to focus on restructuring our choice architectures so that fewer options are considered concurrently.

This has major implications for those designing a choice problem in general and the domain of policy in particular.  While some decision-making interventions employ choice architectures that direct individuals toward certain choices while maintaining the opportunity to consider a larger set of options, Besedes et al. suggest that the appropriateness of this method needs to be evaluated on a case-by-case basis. Instead, policy makers may wish to impose an unpopular choice architecture procedure in order to improve decision making quality.

Read the full research paper, Reducing Choice Overload without Reducing Choices, which has been accepted by The Review of Economics and Statistics, MIT Press.

Tibor Besedes is an associate professor in the School of Economics. His research in international trade focuses on the dynamics and stability of trading relationships between countries and factors determining duration of trade. His research in experimental and behavioral economics has focused on understanding how individuals make decisions in multi-attribute environments similar to decisions involving health insurance or drug coverage plans.