When it comes to making decisions about your money, you probably want to have as much information as possible before diving in, right? In fact, psychologists have found that when it comes to decision-making, sometimes less is more. Given that most of us carry the equivalent of a web-enabled supercomputer in our pockets, we have the ability to access as much information as we’d like about any product or service on the planet. But when the pros and cons of each product aren’t enough to help us make a purchase, we become overwhelmed. Studies have shown that this can lead us to make a sub-optimal decision just to get it done but it can also lead us to put the decision off entirely (hello, Choice Paralysis!).
This is why many companies rely on key pieces of information, called “signals,” to help sell products. Reading the original M.I.T. research that informed the design of your basketball shoes might help explain why they cost $300, but seeing Lebron James wear them on the court probably tells you everything you need to know. Anna Karmani, a marketing professor at the University of Maryland, has an explanation for why these signals are so beneficial for brands: "We just simply don’t have the time to review each and every purchase we make, so signals help us make our choices."
Use this knowledge If you find yourself overwhelmed with information while choosing a product or service, hang back and let the crowd and experts do the research for you. Find a trusted source who’s already done the testing — whether it's a favourite website or well-regarded friend — and follow their lead.