Too many choices can lead to bad decisions

"When you give people a lot of options, they can get bogged down and, at some level, become unwilling to consider anything because it just gets too complicated," says Tibor Besedes. (Credit: "colorful shoes" via Shutterstock)

Having more choices is generally considered a good thing—until you actually have to put it into practice.

Researchers say that’s when the frustration of picking one thing from dozens of options can take over and lead to choice overload.

“Standard economic theory will tell you that more choice is always better,” says Tibor Besedes, associate professor of economics at the Georgia Institute of Technology.

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(Credit: Tanya LeRoith/Flickr)

How to make the best choice

“Theoretically, that works out, but when you have to apply it, that’s very different. When you give people a lot of options, they can get bogged down and, at some level, become unwilling to consider anything because it just gets too complicated.”

To help people make better choices when confronted by a large number of options, researchers studied decision-making strategies that break down the options into smaller groups that can be evaluated more effectively.

One approach, analogous to a sports tournament, increased the likelihood that volunteer study subjects would make the best choice by 50 percent.

But the tournament approach was the least liked by the study subjects, perhaps because it forced them to make more choices and to abandon decisions they had already made. On average, the tournament process also required more time than the other two approaches studied.

The experiment

Spurred by concerns over the large number of Medicare Part D prescription plans available, researchers initiated the study to compare strategies for making choices from large groups of options.

They set up an online experiment that allowed them to study decisions made by 111 volunteers who were asked to choose one option that would provide the best payoff from among 16 choices, and were rewarded by as much as $25 if they made optimal selections.

The study, published online in the Review of Economics and Statistics, evaluated the following decision strategies:

  • Simultaneous choice, in which all 16 choices were considered together.
  • Sequential elimination, which began with choosing one option from among four choices. Three additional choices were then added to the one chosen from the first group, and the process continued through five rounds until all but one option was eliminated.
  • Sequential tournament, in which four groups of four options were randomly chosen by a computer, and the subjects were asked to choose one option from each group. The options chosen from the first four groups were then put into a finalist group from which the final selection was made.

Study subjects were allowed to use all three approaches, and were asked to specify their preferences. Overall, the sequential tournament approach produced the best decisions, but was the least popular of the methods, Besedes says. Considering all of the options together was the most popular, but produced the worst outcomes.

Sticking with a first choice

“We know from all the studies that we’ve done that if you have a smaller choice set, you tend to do better,” Besedes explains. “There is a lot of information that you have to go through, and you have to understand what all of those things mean, and from that information, figure out what’s best for you. You can’t do that while choosing from 16 options at a time.”

The sequential elimination approach, in which volunteers were asked to repeatedly eliminate new options added to a choice they had already made, didn’t perform any better than simultaneous choice.

That may be because people tend to avoid making new decisions by sticking with their first choice—even when offered potentially better options.

The experiment was done using a network of online volunteers enrolled by Vanderbilt University. Respondents were asked to choose from a group of cards that had different probabilities of payoff. This generic choice scenario was used to eliminate personal biases that might have arisen in choosing between real-world options such as insurance plans, Besedes says.


While the initial focus was on choosing prescription drug plans, the approaches studied could be used for choosing retirement programs, health care insurance, automobiles, homes, cell phones, and other products or services with many choices.

“This approach could apply to any situation in which you have a lot of options,” he says. “The difference between choosing a Medicare Part D plan and picking a cell phone is that the cell phone decision is less important financially.

“If you choose the wrong retirement or prescription drug plan, the cost of making a mistake can be considerable. And by the time you realize you’ve made a mistake, it may be too late to correct it.”

Researchers from University of Arkansas, Louisiana State University, and University of Connecticut contributed to the study.

The National Institute of Aging, part of the National Institutes of Health, funded the work.

Source: Georgia Tech