Imagine you are at a restaurant debating whether to order a healthy, but not very appetizing salad or an artery-clogging, yet delicious hamburger with all the works. What would lead you to choose the salad? New Wharton research suggests your decision might not be dictated by the fear of retribution from your doctor or partner or any other factor offered up by conventional wisdom. Rather, what may matter most is how long the menu is.
In a paper titled, Variety, Vice and Virtue: How Assortment Size Influences Option Choice, Wharton marketing professor Jonah Berger, Wendy Liu, a marketing professor at the University of California, Los Angeles, and Aner Sela, a doctoral student at Stanford University, describe five experiments exploring the nature of choice using ice cream, fruit and electronic equipment. The researchers found that increasing the number of goods or services available to consumers can lead them to make sensible choices, because they are easier to justify than more indulgent ones.
Conventional wisdom suggests that providing a larger selection of goods encourages consumers to make a purchase because they are more likely to find a product that suits them. Today, the consumer is confronted with many more options than ever before, says Berger. While stores may once have stocked just two types of ketchup, there may now be 10 -- or 100 magazine titles when there were once 25.
Recent research by other academics, however, has shown that as the size of an assortment grows, consumers can become overwhelmed and often choose not to choose. According to Berger, the concept is known as the paradox of choice.
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But there is a richer layer of complexity when consumers are in a situation where they have to make a choice. To explore that situation, Berger and his fellow researchers set up a series of experiments offering coupons or token amounts of cash to participants as a way to study how the number and variety of assortment determined what they purchased.
Choosing from larger assortments tends to increase choice difficulty and, consequently, can cause consumers to rely more on accessible justifications when making their choice, the authors note in their paper, which was published in the April 2009 issue of the Journal of Consumer Research. As a result, we argue that choosing from a larger assortment should lead consumers to select options that are easier to justify. According to Berger, the situation boils down to a showdown between nice-to-have versus need-to-have products. It's easier to justify eating healthy fruit over sinful chocolate cake, or a printer for work over a digital music player. Things that are functional are easier to justify than things that are fun.
The first experiment was aimed at understanding the influence a large selection of goods has on a consumer's choice. Research participants were shown pictures of ice cream and were asked to select a flavor. The smaller assortment had two choices: one full-fat and one reduced-fat option. In the larger assortment, there were 10 choices, and half the options were reduced fat. Of the participants presented with the smaller assortment, 20% selected reduced-fat ice cream, while 37% of those who had more choices selected reduced fat.
In another study, a tray with fruit and baked goods was placed at two entrances of a building, with a sign reading: Please help yourself to one item. At one entrance, the researchers placed a tray containing a small selection: two types of fruit and two types of cookies. They put a tray with a larger selection at the other entrance so that passers-by were presented with six types of fruit (bananas, red and green apples, pears, tangerines and peaches) and six types of baked goods (assorted cookies as well as croissants and banana nut muffins). While 55% of the participants chose fruit over baked goods from the smaller assortment, 76% did so when choosing from the larger assortment.
The researchers then tested whether the effect of assortment size would carry over into a situation in which individuals had to choose between utilitarian and pleasurable options. In this case, participants looked at samples of printers and MP3 players. An earlier test already showed that printers were viewed as more virtuous purchases than MP3 players. When the choice consisted of two printers and two MP3 players, only 11% chose a printer. But when the assortment increased to six printers and six MP3 players, 50% selected printers.
Further evidence that more options lead people to choose things that are easier to justify came from looking at what happened when just the number of MP3 players in the choice set was increased. While one could imagine that adding more MP3 players should increase the likelihood that an MP3 player is selected, it actually led people to choose more printers -- that is, the option that was easier to justify.
After establishing the relationship between choice and assortment size, the researchers designed experiments to explore the underlying forces shaping these patterns. Participants were asked whether they would choose a printer or an MP3 player from various assortments and then rated the extent to which they found it difficult to make a decision about which option to pick. The results were similar to the earlier experiment -- the printer was selected by 51% in the larger sample and 34% for the smaller assortment. Further results indicated that increased choice difficulty drove people to choose an option that was easier to justify -- in this case, a printer.
The researchers also surveyed individuals about the level of satisfaction they experienced when making virtuous choices compared to indulgences. Their findings indicate there is a guilt factor in which people who select a less virtuous choice from a larger sample are more likely to feel afterwards that they should have made a different choice.
The paper explores the process of how, in certain circumstances, consumers find it easier to justify less virtuous choices. For example, Berger says, someone who had just done charity work might find it easier to choose something that is fun even from a large number of choices. If you are just coming out of the gym, you might feel justified to choose something to eat that is unhealthy, he notes. So while more options lead people to choose things that are easy to justify, what in particular is easy to justify may vary based on situational factors. According to the paper, Even seemingly irrelevant information (e.g., stating that a previous consumer chose a particular product) could provide consumers with an accessible reason that may facilitate choice.
The researchers concede that their study results have limitations: An important boundary condition for these findings is the extent to which larger assortments actually increase choice difficulty. If choosing from larger assortments is not more difficult (e.g., when one option dominates or when consumers have well-defined preferences), then larger assortments should be less likely to influence the type of options consumers choose, the paper states. According to Berger, their findings show that when choice difficulty is present for consumers who are confronted with a larger assortment, they tend to choose a certain way.
The findings have particular marketing and managerial implications, says Berger. For example, manufacturers of healthy snacks might improve sales if they sell their products in venues with many other options. An award-winning drama -- which for argument's sake may be considered more virtuous than a slapstick comedy or big-budget action film -- might attract larger audiences at a multiplex cinema than at an art-house theater. At the car-rental kiosk, sensible sedans could be selected more often than flashy sports cars if the selection of automobiles is large.
The authors describe how a recruiter might react when sifting through a pile of job applications. The recruiter might be influenced by the number of candidates in the pool, the length of each application and similarities among individual resumes. To the extent that these factors are associated with greater choice difficulty, they are likely to bias choice outcome in favor of choices that are easier to justify, they write. This could potentially lead the recruiter to select participants of particular races, genders or background characteristics.
Berger says improving the understanding of the nature of choice could have a powerful impact on society. He points to the 2008 book, Nudge: Improving Decisions About Health, Wealth and Happiness, by Richard H. Thaler, a behavioral economist, and Cass R. Sunstein, a professor of law at the University of Chicago. Nudge draws on psychology and behavioral economics to develop the idea of libertarian paternalism. Though traditionally associated with public policy making and how governments can influence citizens to make decisions to improve their lives, libertarian paternalism in this case involves how businesses can structure the environment in which choices are made to influence consumers' decisions. For example, Berger says, restaurants can offer healthy meals; by doing so with longer menus, they might also encourage people to actually select the healthier options.
This unanticipated benefit of assortment can potentially be used to improve consumer welfare -- but with caution, the researchers write in their paper. Giving consumers more options should increase their reliance on justifications for choice, but this will only improve their welfare in cases in which those reasons point them to better options. Whether the overall combination of these factors has positive or negative welfare implications remains to be seen.