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The Art of Choosing: How We Make Decisions

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As Americans, we believe we have reached some kind of pinnacle in how we engage in decision-making and how we make choices. Sheena Iyengar points out the following very American assumptions that do not always hold true in other cultures, other countries and even within America's own borders. For example,

1. If a choice affects you, then you should be the one to make it.
2. The more options available, the more likely you are to make the right choice.

Iyengar and a colleague studied number two and found that seemingly trivial choices, such as whether to choose Coke (KO) or Pepsi (PEP), are negatively impacted by too many options.

Challenging number two is perfectly consistent with deflation as a cultural phenomenon that is now appearing as an economic phenomenon. Socionomics and the shift in social mood actually impact the studies findings, creating a negative view of choice as problematic. How can this possibly be? Isn't science rigorous and objective? Consider the irony that choice actually plays a significant role in which studies to pursue? As well, consider that the paramaters of the study, as Iyengar observes, also play a role in what the results will be since Americans are "trained" to cope with choices, even artificial choices. "The value of choice depends on our ability to perceive differences between the options," she says. "Americans spend their whole lives playing 'spot the difference'."

In all, it's a fascinating video.
POSITION:  No positions in stocks mentioned.