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THE PARADOX OF CHOICE

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Title: PowerPoint Presentation Author: Information Technology Services Last modified by: Farm Foundation Created Date: 12/1/2002 5:27:30 PM Document presentation format – PowerPoint PPT presentation

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Title: THE PARADOX OF CHOICE


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THE PARADOX OF CHOICE
  • Barry Schwartz
  • Collaborators
  • Andrew Ward
  • Sonja Lyubomirsky
  • Katherine White
  • Darrin Lehman
  • John Monterosso
  • Jane Gillham
  • Jamin Halberstadt
  • Sheena Sethi-Iyengar

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This Talk
  • Choice and satisfaction

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This Talk
  • Choice and satisfaction
  • Freedom, choice, wealth, and welfare

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This Talk
  • Choice and satisfaction
  • Freedom, choice, wealth, and welfare
  • What to do about food

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  • Is this good news or bad news?

YES!
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285 Brands of Cookies
110 Televisions
  • 230 Soups

75 Iced Teas
6.5 Million Stereo Systems!!
175 Salad Dressings
40 Toothpastes
275 Cereals
30 VCRs and 50 DVD Players
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  • Phone service
  • Local, long distance, cellular

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  • Health Care
  • Direct marketing of drugs
  • Patient autonomy

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  • Retirement plans

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  • Work When to do it

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  • Physical appearance
  • Botox
  • Cosmetic Surgery

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  • Marital and family arrangements

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  • Identity

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MAXIMIZING SATISFICING
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Thus a paradox Freedom of choice
becomes tyranny of choice
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Americans are richer than ever before
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Americans are richer than ever before Americans
are sadder than ever before
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Americans are richer than ever before Americans
are sadder than ever before Why?
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Americans are richer than ever before Americans
are sadder than ever before Why? Too much
choice is part of the answer
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What Too Much Choice Does
  • Jams in a gourmet food store

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What Too Much Choice Does
  • Jams in a gourmet food store
  • Chocolates in the laboratory

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What Too Much Choice Does
  • Jams in a gourmet food store
  • Chocolates in the laboratory
  • Snacks, soft drinks and beer in convenience
    stores

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What Too Much Choice Does
  • Jams in a gourmet food store
  • Chocolates in the laboratory
  • Snacks, soft drinks and beer in convenience
    stores
  • 401(k) participation in the workplace

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  • With so much choice, people may do better

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  • With so much choice, people may do better
  • but they feel worse

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Why Choice Makes People Miserable
  • 1. Regret and anticipated regret

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Why Choice Makes People Miserable
  • 1. Regret and anticipated regret
  • 2. Opportunity costs

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  • Offer participants 2 or a good pen 75
    choose pen

Offer participants 2, or 1 good pen, or 2
cheaper pens 45 choose either pen
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Where to go on vacation? 1. Beaches of the
Caribbean
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Where to go on vacation? 1. Beaches of the
Caribbean 2. Golf at Hilton Head
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Where to go on vacation? 1. Beaches of the
Caribbean 2. Golf at Hilton Head 3. Awesome
power of the Rockies
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Where to go on vacation? 1. Beaches of the
Caribbean 2. Golf at Hilton Head 3. Awesome
power of the Rockies 4. Culture of New York
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Where to go on vacation? 1. Beaches of the
Caribbean 2. Golf at Hilton Head 3. Awesome
power of the Rockies 4. Culture of New
York Choose your Number 1
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Where to go on vacation? 1. Beaches of the
Caribbean 2. Golf at Hilton Head 3. Awesome
power of the Rockies 4. Culture of New
York Choose your Number 1 Go, have a good time,
but
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Why couldnt I have found a place with beautiful
beaches and great golf, and awesome power, and
culture
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The lesson of opportunity costs
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The lesson of opportunity costs The more
options you offer, the less attractive each of
them will seem
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Why Choice Makes People Miserable
  • 1. Regret
  • 2. Opportunity costs
  • 3. Escalation of expectations

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  • The lesson of expectations
  • What matters to satisfaction is whether
    experience meets expectations or not

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Why Choice Makes People Miserable
  • 1. Regret
  • 2. Opportunity costs
  • 3. Escalation of expectations
  • 4. Self-blame

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Choice and Satisfaction Conclusions
  • As options increase, selection decreases

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Choice and Satisfaction Conclusions
  • As options increase, selection decreases
  • As options increase, satisfaction decreases

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Freedom, choice, wealth, and welfare Implicati
ons of the research
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The Official Dogma
  • Maximize welfare, not wealth
  • This means maximize freedom
  • This means maximize choice
  • Markets maximize freedom
  • Wealth enhances freedom
  • More wealth means more choice
  • More choice means more freedom
  • More freedom means more welfare
  • NOT!!

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Libertarian Paternalism
  • And car insurance
  • And organ donation
  • Pay attention to default options (the
    paternalism part)
  • But usually let people opt out (the libertarian
    part)

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What to Do About Food
  • Experience goods but there are too many to
    experience
  • Credence goods but informational asymmetry has
    become the rule
  • Is the governments role just to insure safety,
    or is it also to promote welfare?
  • If promoting welfare is part of the mission,
    barriers to entry might well be part of the policy

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What to Do About Food (cont.)
  • The Consumer Reports problem
  • Principle of the flat maximum
  • The Zagat Guide model selective review and
    rating
  • But how can a federal agency possible do this?
  • Perhaps in partnership with private, non-profit
    evaluation services

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