Decision-makers frustrated or paralyzed by too many choices

Many studies have shown that people welcome choices, but not too many. A proliferation of alternatives slows people down and frustrates them. As summarized in the Fin. Times, Jan. 6, 2006 at 7, “as the number of choices increases so does the perceived risk of making a bad choice — prompting people to refuse to make one at all.” Notice that panels of law firms tend to having only five or six firms (See my posts of April 18, 2005 on the term; Nov. 13, 2005 on four firms at RHM; Feb. 15, 2006 on two more examples; and March 30, 2006 on Societe General’s.).

Or when counselors give clients choices, two or three is better than seven or eight, especially if each branch has a host of sub-choices. People can’t process that degree of cognitive complexity.

The psychology of choice also brings into play the quirk of “adaptation,” in which the pleasure from having made a good decision quickly evaporates. Research has shown that “people consistently underestimate how soon the feel-good factor wears off.” When a department carefully selects a case management system from the many on offer, for example, the honeymoon may quickly end (See my post of May 16, 2006 on disappointments with such software.).

Usually decisions can’t be simplified to a handful of clear choices, so we should at least be aware how the psychological fulcrum of our minds can only balance a manageable number.