Most Popular ArticlesFrame Decisions
September 22, 2009
For another illustration, Ariely showed why organ donor participation rates are strikingly different among European countries. Those countries that present an opt-out choice (e.g., “check this box if you don’t want to participate in the program”) have far higher participation rates than those countries where participants have to check a box to opt-in.
“We think we are making decisions, but they are largely decided by the design used by the person presenting the choice,” he said.
In another study, a group of doctors had to decide whether to call back a hypothetical patient they had previously referred to a hip replacement surgeon. After they made the referral, they were told they had forgotten to try additional medications before recommending surgery. Some doctors were told that they could tell the patient to first try only one other medication, while the other group was told that they could tell the patient to first try one of two other mediations.
In the first case, the majority of doctors said they would call the patient back and have them try the additional medication. In the second case, the majority would not call the patient back.
“The more complex the problem, the more likely we are to choose the default option,” Ariely said, even though the right decision was clearly to try additional medications.
Default options are enormously powerful, especially in situations involving complex or difficult decisions.
Ariely offered one other experiment to illustrate the power of default options. Consumers in a supermarket were offered the chance to try different jams. In one scenario there were six different jams on the display table; in the other there were 24.
The researchers recorded the percentages of people that approached the tables, tried the jams, and purchased a jam:
| 6 jams | 24 jams | |
| Approached the table | 40% | 60% |
| Tried a jam | 1.4 | 1.5 |
| Purchased a jam | 30% | 3% |
Presenting only six choices instead of 24 made it ten times more likely that someone would purchase a jam. In fact, 3% is the rate at which people bought jam if there was no display table. Overwhelming customers with 24 options totally negated the enticing effect of offering a free sample.
When presenting clients with investment options – a choice among mutual funds, for example – the greater the number of choices, the more likely it is that the client will not do anything, Ariely said.
“Defaults are neither good nor bad,” Ariely said, “it’s a question of how to use them.”
“If you take the ideas of default and complexity, and look at how these work together as the decision becomes more complex, the default becomes more likely,” he said. In the world in which advisors operate, almost all decisions are complex, making the power of the default option even greater.
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