The Fuzzy Logic Experiment Transcript

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Adam Alter: We all love choices, right? It’s better to choose from 24 cupcakes than from 3, for example. But it’s a really?

Narrator: In reality, we struggle with making many decision at all when confronted with too many options. Research shows that, the more we struggle, the less happy we tend to be with our decision. And that’s just choosing cupcakes. But what about more complex decisions like choosing a retirement investment? We thought we had a little fun with that. We created an exercise to help simulate some of the challenges participants face when choosing and allocating funds for a 401K plan. We gave people a complex task with more than one possible solution: sort 20 items in the right way.

Instructor: To help you out, we provided some resource materials you may choose to consult.

Narrator: So where do you start? What’s the right way to sort them? By size? By color? By sound? Without enough information to go on, people got frustrated and confused.

Participant 1: Categories

Participant 2: We got bears…

Narrator: Procrastinated

Participant 1: This is coffee

Narrator: Or made no decisions at all. It’s a little like choosing funds for a 401K plan. Complexity. Too many choices. It’s no wonder people become paralyzed.

Participant 1: Hmmm.

Narrator: And what about all that helpful information?

Participant 3: Identify, not to distinguish…

Narrator: When does this information become information overload?

Participant 3: No. It’s gotta be in here.

Narrator: Finally, to help simulate how uncertainties, like a new job or a change in the markets, can affect retirement goals, we changed things up a bit.

Participant: Are you kidding?

Narrator: Just like when choosing funds for a 401K plan, too many choices, ambiguity, and uncertainty can lead to decision paralysis and weigh you down. It’s really not surprising, people just give up.

Adam Alter: Now if we could find a way to remove these challenges from making more important decisions, like investing for retirement, I suspect we’d see better outcomes, and people would be a lot happier in the end.

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