The Hindu Business Line : Less is more

RECENTLY, my friend decided to treat himself to dinner at an exotic restaurant. He had a horrific time deciding what to eat because the restaurant offered a wide spread!

He later said that he was happier with his neighbourhood restaurant that offered lesser choice.

Is my friend rational? After all, classical economics tells us that we are better off with more choice. But if you observe, we are not comfortable when faced with too many choices. Why?

Suppose you want to buy potato chips. And you find that the local department store has 10 varieties. Decision-making then becomes an ordeal. Imagine how much time we would have to spend to make hundred such decisions!

But why do we look at alternatives at all? Why not simply choose one and ignore the rest? One reason is because of the "tyranny of small decisions".

Suppose you want to buy a party dress. Assume that 20 stores in a mall stock such dresses. You will not go to the mall with an intention of visiting all the stores.

Yet you will visit one more store each time you step out of the previous one. And sure enough, you would have visited all the 20 stores. You will then be confused about what to buy!

There is another reason for our behaviour. Suppose the restaurant offered my friend 5 desserts of which he chooses two. My friend will have this nagging feeling that the ones that he did not choose may have been better.

It is for these reasons that increasing the number of choices leads to negative effect on the consumer.

(The author is Head, Research, Navia Markets)

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