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The "Paradox of Choice" and the "Sweet Spot"

by Phyllis Pollack
February 2014

PGP Mediation Blog by Phyllis G. Pollack

Phyllis  Pollack
The other day, I came across an article on the PBS NewsHour website entitled "Is the famous paradox of choice a myth" by Barry Schwartz dated January 29, 2014. Evidently, there is much controversy whether too many choices create a paralysis.

In 2000, Sheena S. Iyengar (Columbia University) and Mark R. Lepper (Stanford University) published a study entitled "When Choice is Demotivating: Can One Desire Too Much of a Good Thing" (Journal of Personality and Social Psychology, Vol, 79, No. 6, 995-1006 (2000)). They start with the premise that the more choices one has, the better-"that the human ability to manage, and the human desire for, choice is infinite." (Id. at 995.). They then discuss two experiments they conducted in grocery stores. They set up displays of jam for a five hour period to see how ordinary shoppers would react in terms of tasting and purchasing. In one display, they set out 24 different exotic flavors of jam (leaving out the ones we all like such as strawberry and raspberry so that predispositions would not affect the results) while in another, they set out only 6 varieties.

What they found in both studies is that the consumers sampled about the same number of varieties of the jams- 1.50 but the "...consumers [who] were initially exposed to limited choices proved considerably more likely to purchase the product than consumers who had initially encountered a much larger set of options." (Id. at 997.) In sum, a limited number of choices increased sales.

Returning to the PBS article, its author Mr. Schwartz, after discussing this jam study, noted that subsequent studies by other researchers seemed to indicate that the results of the jam study were incorrect: whether the number of choices was large or small did not matter; the result would be the same.

But then he cites two real world examples. One was a large retailer of office supplies. To reduce printing costs and postage, the retailer reduced the number of options on many products offered in the catalog. It immediately noticed that its sales increased.

Similarly, a very large home builder started reducing the number of options available to buyers of custom made homes. For example, rather than providing 34 different types of tile for flooring, it reduced it to a few. Not only did the builder save time (The meeting with the buyers to decide on everything went from 20 hours to four hours.), it saved costs. The builder also found that the buyers purchased more upgrades, had less regrets and more satisfaction. (Id.)

But, at the same time, buyers must be given a choice. The Atlantic published an article, "More is More: Why the Paradox of Choice Might Be a Myth" by Derek Thompson (August 2013) noting that if consumers are given only one choice- take it or leave it- ( "single option aversion")- they reject it. He cites a problem encountered by Williams-Sonoma in which it had a bread maker for sale for $279. No one would buy it. So, the store started selling a second model for $429 as well. Suddenly, "...the sales of the cheaper modeled doubled." (Id.) (And, of course, the more expensive model went unsold!) (Id.)

The conclusion to be drawn is that people require choice; not too many, and not only one on a "take it or leave it" basis. As Mr. Schwartz in the PBS article notes:

The trick is to find the middle ground-the "sweet spot"- that enables people to benefit from variety and not be paralyzed by it. Choice is good but there can be too much of a good thing...." (Id.)

Turning to negotiations, to settle a dispute, people need to be able to make choices. This is why to offer a settlement on a "take it or leave it" basis and as the only option will never work. Just as Williams-Sonoma could not sell its expensive bread maker standing alone, people will not settle a dispute when given only one option. Rather, they must do the "negotiation dance"; bargaining back and forth several times so that they have "choices"! There is a "sweet spot" in every settlement- where one is offered not too little but not too much that entices her to accept the terms and settle. The trick is to find it.

.... Just something to think about.

Biography


Phyllis Pollack with PGP Mediation uses a facilitative, interest-based approach. Her preferred mediation style is facilitative in the belief that the best and most durable resolutions are those achieved by the parties themselves. The parties generally know the business issues and priorities, personalities and obstacles to a successful resolution as well as their own needs better than any mediator or arbitrator. She does not impose her views or make decisions for the parties. Rather, Phyllis assists the parties in creating options that meet the needs and desires of both sides.  When appropriate, visual aids are used in preparing discussions and illustrating possible solutions. On the other hand, she is not averse to being proactive and offering a generous dose of reality, particularly when the process may have stalled due to unrealistic expectations of attorney or client, a failure to focus on needs rather than demands, or when one or more parties need to be reminded of the potential consequences of their failure to reach an agreement.



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