Why do our preferences change depending on whether we judge our options together or separately?

The Less-is-Better Effect

, explained.
Bias

What is the Less-is-better Effect?

The Less-is-better Effect describes how people sometimes prefer the worse of two options, but only when the options are presented separately. When people consider both their choices together, their preferences reverse, so that the less-is-better effect disappears.

Where this bias occurs

Imagine your birthday is coming up, and your friends, Andrew and Amy, each give you a present. Andrew gives you a book—a new release that’s only out in hardcover, making it a bit pricey for a book, at $35. “Wow,” you think, “What a generous gift!”

Some time later, when you see Amy, she gives you a new jacket, which you happen to know costs $45. You like it, and it fits, but you can’t help but feel like $45 is pretty cheap for a piece of outerwear. “I didn’t realize Amy was this stingy,” you think to yourself.

Related Biases

Sources

  1. Tversky, A., & Kahneman, D. (1981). The framing of decisions and the psychology of choice. science, 211(4481), 453-458.
  2. Hsee, C. K. (1998). Less is better: When low‐value options are valued more highly than high‐value options. Journal of Behavioral Decision Making, 11(2), 107-121.
  3. Hsee, C. K. (1996). The evaluability hypothesis: An explanation for preference reversals between joint and separate evaluations of alternatives. Organizational behavior and human decision processes, 67(3), 247-257.
  4. Kahneman, D. (2011). Thinking, fast and slow. Macmillan.
  5. Medvec, V. H., Madey, S. F., & Gilovich, T. (1995). When less is more: counterfactual thinking and satisfaction among Olympic medalists. Journal of personality and social psychology, 69(4), 603.

About the Authors

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Dan Pilat

Dan is a Co-Founder and Managing Director at The Decision Lab. He is a bestselling author of Intention - a book he wrote with Wiley on the mindful application of behavioral science in organizations. Dan has a background in organizational decision making, with a BComm in Decision & Information Systems from McGill University. He has worked on enterprise-level behavioral architecture at TD Securities and BMO Capital Markets, where he advised management on the implementation of systems processing billions of dollars per week. Driven by an appetite for the latest in technology, Dan created a course on business intelligence and lectured at McGill University, and has applied behavioral science to topics such as augmented and virtual reality.

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Dr. Sekoul Krastev

Sekoul is a Co-Founder and Managing Director at The Decision Lab. He is a bestselling author of Intention - a book he wrote with Wiley on the mindful application of behavioral science in organizations. A decision scientist with a PhD in Decision Neuroscience from McGill University, Sekoul's work has been featured in peer-reviewed journals and has been presented at conferences around the world. Sekoul previously advised management on innovation and engagement strategy at The Boston Consulting Group as well as on online media strategy at Google. He has a deep interest in the applications of behavioral science to new technology and has published on these topics in places such as the Huffington Post and Strategy & Business.

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