How too many options can impair the ability to make skillful choices
A study by Columbia Business School Professor Sheena Iyengar, S. T. Lee Professor of Business, Management, and Emir Kamenica, Associate Professor of Economics, University of Chicago Booth School of Business, found the more fund options an employee has to choose from when presented with 401k options deters he or she from enrolling in the plan. The professors conducted three experiments in order to determine how increasing the size of a choice set will impact the option the consumer will chose, evolving from earlier studies that have focused on whether increasing the number of choices affects consumers' willingness to participate in the market. The researchers discovered that giving consumers too many options can impair their ability to make skillful choices and erode their ability to determine the optimal choice for them. The study was published by the Journal of Public Economics.