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The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics

Sep 24, 2021

I know you have a lot of options for what to listen to, and I’m glad you chose The Brainy Business. Especially because (as you’ll hear about on today’s episode), due to the paradox of choice, having too many options and decisions can leave people paralyzed instead of empowered. That paralysis can make it so people don’t make any decision at all, so you stick with the status quo of scrolling Instagram or playing a game on your phone. With over 2 million podcasts out there to compete with (plus all the YouTube channels, Netflix, and other streaming services, music options like Spotify and Pandora), plus games and email, and...well you get the idea...There are a lot of options out there that could have made tuning in a very complicated choice.
In today’s episode, I will tell you all about the paradox of choice: what it is, and why it matters for you in life and in business (including some tips for creating and presenting options to your current and potential customers).

Show Notes:

  • [00:06] Today’s behavioral economics foundations episode is about the paradox of choice.
  • [03:02] As I mentioned in the introduction, the paradox of choice is a term and concept popularized by Barry Schwartz, whose book and popular TED talk have been shared around the world.
  • [04:42] When presented with too many choices (like we have in most societies today) people become paralyzed, stressed, and feel stuck. It can cause mental anguish and regret. Some choices are good, but too much and we are definitely worse off.
  • [05:24] The really important thing to know is that adding some choice is important. Because we humans can’t value one-off items, having at least some choice and comparison helps us to make a decision and feel good about it, but too many and we get overwhelmed.
  • [07:15] When there are too many choices, our brains get overloaded.
  • [09:41] It is easier to stick with what we have always done than to look for something that may or may not be better. 
  • [11:42] Your subconscious is dealing with this sort of letdown constantly. It can get very taxing over time and it’s no wonder our brains rebel at the idea of evaluating too many options.
  • [13:14] In a world where there is always another option, always a list of potential matches and the feeling that (much like the pair of jeans) perfection is “just one search away” can be hard to settle even when the choice is something you would be incredibly happy with. That constant thought of “what if” can be too much for many to bear.
  • [13:53] Anticipated regret can have a huge impact on behavior. We want to choose wisely and, frustratingly, this pursuit of perfection (or even just a little bit better) can cause us to make worse decisions.
  • [15:02] The important thing to know is that while it seems like lots of choice and infinite options would make us happier (increasing our freedom and wellbeing to use the terms from earlier) that just isn’t how it works.
  • [17:12] A maximizer is always looking for the best of the best. They want to make sure that they choose whatever is objectively the best there is every single time. That anyone else could look at and know that it is conclusively “the best choice”.
  • [17:28] Satisficers are people who find something that is “good enough” and feel satisfied with that choice. Once satisficers find something they are happy with, they are good to go and don’t necessarily dwell on “what might have been” too much. Even if there was a better option out there you could have made, you are subjectively happy and therefore at peace with the decision.
  • [20:04] For maximizers (like my husband), these details are vital pieces of information needed to make a decision, and for satisficers (like me), it is just too much to think about.
  • [22:45] The first tip is to choose when to choose. If you only save the big evaluation for the really important stuff, it will help you have that mental capacity when you need it and not be so stressed and overwhelmed with the small stuff.
  • [24:07] Don’t waste a bunch of mental energy on decisions that don’t matter. Be happy with good enough whenever you can, so you can have more mental energy when you need it.
  • [24:22] The next tip, which is to become a chooser, not a picker.
  • [25:27] The next tip is to satisfice more and maximize less. As you just heard, satisficers are happier, less stressed, less regretful, and so much more. Good enough is often good enough.
  • [25:58] Think about the costs of missed opportunities. In short, you should look for the balance of thinking of missed opportunities.
  • [26:20] Next is to make your decisions nonreversible. If you aren’t able to “what if” you are more likely to be happier with a choice you made because you won’t dwell on it.
  • [26:31] Practice an attitude of gratitude. There are lots of studies that find we are happier and better off when we appreciate what we have. Be grateful for everything you have in your life
  • [27:05] Regret less. If you don’t think about choices you have made after the fact and don’t allow regret to control you, it will allow you to be happier overall.
  • [27:19] Anticipate adaptation. We naturally adapt to any situation – plan accordingly to avoid constantly chasing the next high.
  • [27:53] Control expectations. When there are too many choices, the expectations for something to be perfect are far too high, and because nothing can really live up to that standard, you end up with a recipe for always being disappointed with items not meeting unrealistic expectations
  • [28:21] Curtail social comparison. What is your happiness worth and how do things change if you add that into your evaluation? Eliminating social comparisons can help with that.
  • [29:11] His last tip is to learn to embrace constraints. Limiting options and reducing possible choices can help you to fulfill these other tips on the list. Embrace the idea of constraints and set up some firm rules for yourself to follow around choice. You will be surprised about how they help your mental state.
  • [30:30] NOW, my tips for business applications (which are different than on an individual level. First, is to know that people are generally overwhelmed with all the decisions they are having to make every day.
  • [31:00] You also want to really consider what choice they are making and what the defaults are.
  • [33:15] When someone asks for your recommendation – give it, and don’t provide more than two options. Be enthusiastic about it, explaining a little of why you like it to prime them for excitement.
  • [34:56] To summarize, you are going to limit the options you present and show that you are the expert (and did the heavy lifting for them) by making recommendations and helping work with those herding instincts by including some social proof.
  • [35:25] If you implement your social proof and relativity and structure the decision well, it can make a decision easier without people getting so overwhelmed that they walk out. They can feel like there are a lot of options, but you can still nudge and guide them along the way to reduce the number of decisions and make them easier. I’m calling this the “illusion of choice.”
  • [37:42] Consider the customer experience – who is searching? What problem are they solving? What is the best solution? How can you make it obvious that it is the best choice for most people to help them decide?
  • [39:17] Melina’s award-winning first book, What Your Customer Wants and Can’t Tell You is available on AmazonBookshop, Barnes & Noble, Book Depository, and Booktopia.

Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. 

I hope you love everything recommended via The Brainy Business! Everything was independently reviewed and selected by me, Melina Palmer. So you know, as an Amazon Associate I earn from qualifying purchases. That means if you decide to shop from the links on this page (via Amazon or others), The Brainy Business may collect a share of sales or other compensation.

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Check out What Your Customer Wants and Can’t Tell You on AmazonBookshop, Barnes & Noble, Book Depository, and Booktopia