Opportunity Cost is the sum of all the benefits provided by the options not chosen

When making a choice, the combined benefits (opportunities) of all the available options not chosen is the opportunity cost. The more potential options, the higher the opportunity cost of the selection.

Schwartz provides this example:

Consider this study: Two groups encountered a variety of jams at a sampling table. One group could sample only 6 different jams, and the other group, 24. The group who could sample from the larger array were much less likely to ultimately buy one of the jams than the group that were presented with just six.

Why?

As the chooser narrows her choice down to a particular jam, the various attractive features of all the jams not chosen accumulate to make the chosen jam seem less exceptional. So, the more jams, the greater the opportunity costs, and the less attractive the chosen jam will seem.

As this shows, increased choice reduces both our power to decide and any pleasure to be gained from what we actually choose.[1]


#strategic #psychology

See also:


  1. The Paradox of Choice – Schwartz (2009) ↩︎