Diversification Bias
The Basic Idea
When you’re going on a big grocery run, it can be difficult to choose what to buy for your future self. Even if you know what you like, you might wonder if your preferences will change or if you’ll get tired of what you always want. As a result, you might buy a wider variety than usual.
When it comes time to cook and eat the food you’ve bought, you’ll likely find your preferences have not changed drastically, and that you have more kinds of food than you actually want. This discrepancy results from a cognitive bias called diversification bias, or naive allocation.
Diversification bias describes people’s tendency to spread limited resources evenly over a set of possibilities. It can result in us choosing variety even when it does not align with our actual desires. We use the diversification bias to streamline our decision-making, but this can sometimes lead to choices that do not reflect what we actually want or what is best for us. As its other name implies, we act as if we are naive to our own preferences or history when we blindly choose to include more variety.
What consumers buy can be systematically influenced by how much they buy.
– Itamar Simonson
About the Author
Katharine Kocik
Katharine Kocik earned a Bachelor of Arts and Science from McGill University with major concentrations in molecular biology and English literature. She has worked as an English teacher and a marketing strategist specializing in digital channels.
