Consumer Bias: Middle Options and the Paradox of Choice

A recent article from American Economic Review looks at the consumer bias in preferring the middle of three options, and the tendency to buy less when offered more.

Numerous studies demonstrate that seemingly irrelevant factors influence people’s decisions. […] When three alternatives are available, the middle alternative is chosen more often than when it is paired with only one other option. […] In choice overload experiments, customers are less likely to make a purchase if more products are added to the choice set.

[…]

In this paper, I develop a model where uninformed consumers learn payoff-relevant information by observing what goods are available. The tendency to select the middle option thus naturally arises when there are consumers who are unsure which option is best for them, but know their tastes are middlebrow. Choice overload comes as no surprise if excessive product lines reduce consumers’ information about which varieties are likely to suit them.

Admittedly not the most revelatory of papers, but I find it difficult not to link to studies on consumer behaviour.

via Overcoming Bias