Earlier in the spring I talked about people and choices. The popular viewpoint of the last few decades is that people prefer to have choices in the items they buy. So marketers offer us 9 versions of the same product, competing with 9 versions of the same product form 9 different companies. The issue is that while having more choices does give us the option of finding the perfect fit, more often than not the burden of choice makes things more difficult to actually make a decision. Let me offer you an example.
The Sheconomist and I are planning a late October road trip through the southeast. We’ll stop in one area that offer literally hundreds of hotel options for a few days. To me this is great because lots of hotels means lots of competition means low rates. And indeed they are. So I quickly anchored our budget to where the mid range hotels that offered free internet and breakfast were advertising. The problem was we still had tons of options. Some were newer but cost more, others one out on extra features or top location but might have cost more. We quickly got to the point of decision paralysis.
My wife and I had differing priorities for the hotel therefore we spent an exorbitant amount of time looking at hotels. Too much time in hindsight. It got to the point where neither of us could find a hotel that fit all our needs (and my price anchor). We found decent ones, but they weren’t perfect. We lived in fear of not picking the best hotel for us. It almost came down to us not going because the choices started to stress us out.
We eventually did find the perfect hotel at the perfect price, partially because the offer became available days after we first started looking. But most of the stress could have been avoided with one simple step: an initial commitment.
Booking a hotel is likely one of the first steps for any trip. Without it, you won’t take the trip; which put us in a state of vacation limbo. Before the search started we should have found one hotel that both of us could live with and booked it. That way we’re committed to the trip and have a place to stay. Then we can casually look for a better deal, but it won’t be stressful since we already have a baseline for comparison. We’ll either find something better and book it, or we won’t. Either way we’re happy to know we made the best choice.
I’ve said before the only thing I ever really struggle to make a decision on is what candy to get from the candy aisle. There are too many choices and I will stress out if pushed for time. I could make myself better of by doing the same commitments. Find a candy I know I’ll be happy with, put it in my hand, and then search for others I might like better. But with the baseline in my hand I’ve already made a choice. Now I’m just using what time I have left to see if I want to change my mind. But at least my mind is made up.
I call this mental game the “baseline of choice”. When struggling with a decision you make a choice so you’re committed to one. But you structure the transaction in a way that gives you the opportunity to back out if you find something better. However having still committed to something you do like, you no long struggle with committing. You’re simply able to compare your choice to others.
The baseline of choice doesn’t work for everything. It can’t really be done when purchasing a new home, but it’s certainly useful when deciding what kind of beer you want to buy. Do you struggle with decisions? Where could the baseline of choice help you?
Image: bunnyhero
 By The Weakonomist |
The Weakonomist is the face of Weakonomics. Click the puppy to learn more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts above. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing we say can be construed as financial advice. |
