"Paradox of Choice" is a book authored by Barry Schwartz, an American psychologist. In this book, Schwartz argues how the many choices that modern life has presented us have made decision making more tedious, stressful, and unsatisfactory. The more options you have, the more difficult it gets to make a decision, and the less happy you are with your decision. The abundance of choice has made decision-making more complex in many aspects of our lives, from picking a life partner to buying a gift for a friend. Schwartz classifies people into two groups based on their decision-making approaches. First, Maximizers, who seek perfection in every aspect of their life. Maximizers are in a timeless search for the best. Second, Satisficers, who are content with good enough.
Schwartz also discusses the best consumer habits to make good decisions. These are a few steps to take. Define your goals with all details. Weigh the importance and necessity of each choice. Prioritize your choices based on their importance. Evaluate the harmony between options and your goals. Pick the best option that satisfies your goals. In the end, a flexible mindset is required down the road after you made your decision. This helps to modify and adjust your decisions to match future needs.
A few more psychological concepts related to the decision-making biases are discussed in the following.
Choosing Choice: People always want more options before decision-making because it gives them the illusion of being in control. They feel they have more freedom of choice. However, they are happier when making decisions based on fewer options.
Hedonic Adaptation: We will adapt to enjoyable experiences in life. As a result, they become less enjoyable over time.
Salience and Availability: The salience (clarity of an experience) and availability of a situation greatly impact our decision-making process. For example, based on statistics, more people consider airline crashes as a more likely cause of death than car accidents.
Satisfaction Treadmill: When people experience a certain level of satisfaction, they get adapted to it. Therefore, they feel less happy when they experience a previous level of satisfaction. For example, if you have driven Lamborghini for 2 years, you will feel less happy by driving a Porsche.
Framing and Anchoring: Anchoring happens when our decisions are influenced by the information related to our decisions. For example, the legendary investor, Warren Buffet, uses a variety of tools to evaluate the value of a company without knowing its actual value. He believes knowing a company's value before his evaluation creates a bias in his mind that can reflect in his evaluation. Framing happens when the way a statement is framed influences our decision making (negative framing vs positive framing). For example, the way doctors announce the surgery consequences has a major impact on whether the patients decide to have surgery. A doctor may say, you have an 80% chance to improve after this surgery (positive framing). Another doctor may choose to say, you have a 20% chance to not survive after surgery (negative framing).