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A common problem is that when offered too many choices, consumers give up and make no choice. Too many options results in no sale where fewer options might have resulted in more sales. It's like the cognitive load of so many choices makes the decision impossible.

I've heard it called Decision Paralysis or "Analysis Paralysis" but these terms don't seem to have a root in cognitive science. Is there a formal or generally accepted term for this phenomenon?

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My guess is that it has something to do with the application of equal weights to all attributes/options, even when some are irrelevant. Whether a digital camera has a huge sensor or a miniscule sensor should be such a big factor that it outweighs whether the camera finish is glossy or matte black, but I think people have a difficult time rationally weighing these things. Likely, heuristically driven decision making probably assigns weights much more efficiently -- hence, the value of going with your gut! –  Andy DeSoto Feb 22 '12 at 16:00
    
@AndyDeSoto the presumption of equal weight is probably very relevant; related to scanning the ability to filter out irrelevant options is very important. If you can't it may simply seem like all options are valid or that none of them are. –  Ben Brocka Feb 22 '12 at 16:03
    
this RSA video might be of interest. –  Artem Kaznatcheev Apr 9 '12 at 20:25
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up vote 8 down vote accepted

It is "paradox of choice". See these resources:

I actually haven't been able to find anything in my search just now, but I remember some claims about a year ago that recent experiments had suggested that the original results were somewhat over-blown.

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I was additionally planning to ask a question about the significance of it, but I had to know what to call it first –  Ben Brocka Feb 22 '12 at 21:19
    
A TED talk on paradox of choice: ted.com/talks/barry_schwartz_on_the_paradox_of_choice.html –  Steven Jeuris Feb 22 '12 at 21:56
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+1, also known as "choice overload". william is right, though, that the original results may be overblown. see a meta-analysis @ scheibehenne.de/ScheibehenneGreifenederTodd2010.pdf –  Jeff Feb 22 '12 at 22:15
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In HCI terms, which is where I come from, this would probably be called information overload. It is the situation where a person is presented with so much information that they cannot process all of it successfully.

In Cognitive terms, the term probably works best because it is caused, I believe, by insufficient short term memory being available to successfully process what is needed from a page, so the decisions about what to do cannot be made. In a similar way, if too much information is given to a person - even if expressed in terms of "you could do this, or you could do this... " then they cannot dismiss the options enough to narrow it down. Without this, decisions cannot be made.

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Cognitive Load is certainly related but not quite specific enough. Cognitive load refers to any situation where WM is stressed, not just too many options halting the ability to make a decision –  Ben Brocka Feb 22 '12 at 16:00
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