5. They have complete information about the costs and benefits associated with each option.
They compare the options with one another on a single scale of preference, or value, or utility.
And after making the comparisons, people choose to maximize their preferences, or values,
or utilities. Although the science of economics has historically depended on the tenets of
rational choice theory, it is now well established that many of the psychological assumptions
underlying rational choice theory are unrealistic and that human beings routinely violate the
principles of rational choice (e.g., J. Baron, 2000; Kahneman & Tversky, 1979, 1984; Tversky,
1969; Tversky & Kahneman, 1981;for a discussion, see Schwartz, 1986, 1994). Modern
behavioural economics has acknowledged that the assumption of complete information that
characterizes rational choice theory is implausible. Rather than assuming that people possess
all the relevant information for making choices, choice theorists treat information itself as a
"commodity," something that has a price (intime or money), and is thus a candidate for
consumption along with more, traditional goods (e.g., Payne, 1982; Payne, Bettman,
&Johnson, 1993}.Almost a half century ago, Simon (1955, 1956, 1957} suggested an approach
to explaining choice that was more cognizant of human cognitive limitations than rational
choice theory.
6. Simon argued that the presumed goal of maximization (or optimization) is virtually always
unrealizable in real life, owing both to the complexity of the human environment and the
limitations of human information processing. He suggested that in choice situations, people
have the goal of "satisficing" rather than maximizing. To satisfice, people need only to be able
to place goods on some scale in terms of the degree of satisfaction they will afford, and to
have a threshold of acceptability. A satisfier simply encounters and evaluates goods until one
is encountered that exceeds the acceptability threshold. That good is chosen. In subsequent,
accidental encounters with other goods in the relevant domain, the scale of acceptability
enables one to reject a formerly chosen good for a higher ranked one should that one turns
up. A satisfier thus often moves in the direction of maximization without ever having it as a
deliberate goal. Simon's alternati\\i'e to rational choice theory questions not only the processes
by which options are assessed and choices made, but also the motives that underlie choice.
To satisfice is to pursue not the best option, but a good enough option
7. A famous study by Iyengar and Lepper wanted to see how the volume of choice impacted
consumer behaviour. In the first variable, shoppers at a grocery store encountered a display
table with gourmet jam. If shoppers tasted at least one jam (they were free to try as many as
they liked), they were given a $1 discount coupon to use to purchase any jam. In the
extensive-choice condition, the display table had 24 different varieties of gourmet jam. In the
limited-choice condition, the display table had only six different varieties of gourmet jam.
While the larger display attracted more interest, customers were ten times more likely to
purchase from the smaller selection. This suggests that reducing options can enhance
decision-making efficiency and happiness.
8. Critics counter that choice empowers individuals, fostering competition and innovation.
However, Schwartz maintains tha't curated freedom, structured options with clear trade-
offs strikes the ideal balance between liberty and well-being
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