How
to Make Choosing Easier
In the video “How to
Make Choosing Easier” Sheena Lyengar discusses the various problems of choice
overload. She states that when people are given an abundance of choices, they often
choose not to choose. One prime example of this was when I had to decide what
Vanguard funds to include within my retirement portfolio. During my new
employee orientation, I was given a packet of information, and within the
packet was a list of roughly 88 different fund options. Well, because I did not
know much about Vanguard or the funds that were being offering, I decided not
to choose. I actually contacted my old boss who is a broker/financial planner
and asked him to choose the funds for me. Luckily, omitting my option to choose
my own funds did not negatively impact the progress of my portfolio.
I guess the only way I would
have felt comfortable deciding what funds to choose is if the number of fund
options had been reduced. Surprisingly, Vanguard caught on to this and decided
to re-evaluate their funds. Within the past year, the number of funds options available
to me within my retirement plan had been reduced from 88 to 44. All funds with
overlapping investment objectives have been suspended or removed from the plan.
Another example of
choice overload occurred when my boyfriend and I decided to buy a new car. With
the advancement of technology in automobiles, choosing between car manufactures
has become extremely difficult. Now a days, all car manufactures offer cars
that get high gas mileage. So in order to decide what car to buy, my boyfriend
and I had to narrow down the options. We could no longer base our choice on gas
mileage, we had to consider all of the different options available to us. Thus we
began conditioning for complexity; we made a list of options ranging from low too
high in importance. We asked ourselves, what type of warranty is being offered?
What incentives are being given? Does the car have a reverse camera, tented
windows, or fog lights? Should we get a sedan or a cope? After a few weeks of reflecting,
we finally made a decision; we decided to stick with the Nissan Altima. We
knew, from our past experience, that the Altima was a reliable, well rounded
car.
However, it goes
without saying that choice overload reduces: engagement, decision quality and overall
customer satisfaction. And, the only way to reduce choice overload, according
to Sheena Lyengar, it to: (1) cut unnecessary options, (2) making consequences
concrete through comfortization, (3) group similar products in the same category
(4) determining the order in which to present information.
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