The less-is-better effect and how it influences decision-making
When a customer evaluates your product, they will often compare it to your competitor’s product. A one-to-one comparison allows them to easily contrast the differences in your products’ features, quality, and price.
Customers won’t always compare your product before purchasing, however. Often, it’s not practical to spend the effort — for example consumer products bought regularly, or a one-of-a-kind item sold at auction.
Without comparing products, customers may overweight factors that just aren’t important. With the benefit of comparison, they would make a more informed decision.
This bias is called the ‘less-is-better’ effect.
Christopher Hsee, a professor at the University of Chicago tested this theory in a paper published in 2006.
How much would you pay for a dinnerware set with 9 broken items?
The study was framed as two dinnerware sets being sold at a clearance store.
- Set 1 contained dinner plates, bowls and dessert plates. There were 8 of each, for a total of 24 pieces.
- Set 2 contained the same set of dinner plates, bowls and desert plates, but also included 8 cups and 8 saucers. Unfortunately, 2 of the cups were broken and 7 of the saucers were also broken.
We can clearly see that Set 2 is a better collection. Even when we remove all the broken items, Set 2 still contains 6 perfectly good cups and 1 absolutely fine saucer that aren’t in Set 1.
Participants were asked to name the highest price they would pay for the dinnerware sets.
People that were only asked to price Set 2 (with broken items) gave a 29% lower price than those who were only asked to price Set 1.
When the two options were presented next to each other, the suggested prices for each reversed and Set 2 was priced 8% higher than Set 1.
Without the benefit of seeing both options, why do people price Set 2 lower than Set 1 when it clearly has more items?
It’s because we are not experts in buying and selling dinnerware set. We don’t know how much a second-hand dinnerware set should cost, so we look for an easily-accessible anchor point. In this case, we see the broken items and make a judgement that the whole set is of lower quality.
So that’s one example. Where else has the less-is-better effect been observed?
In another study, Hsee asked participants to imagine they were given a coat as a gift from a friend. He gave half the participants the coat in option 1 below and the other half the coat in option 2.
- A $55 coat bought from a store with prices ranging from $50 — $500.
- A $45 coat bought from a store where coats ranged from $5 — $50.
Hsee’s study found that the participants given the second option rated their gift more generous than those given the first option. We are able to compare the two options and can see clearly that option 1 is indeed the more generous gift.
In a third study, a small quantity of ice-cream was poured into a small cup so that it was overflowing. A larger amount of ice-crema was poured into a much larger cup that was subsequently only half-filled. Participants were again only given one of the two ice-creams and asked to price its value. Even though the half-filled cup contained a greater volume of ice-cream, participants priced the overflowing cup higher than the one that was only half-filled.
Interesting study, but how is this relevant to me?
The less-is-better effect and Hsee’s studies show the importance of the context where decisions are being made. If the decision-maker only has access to evaluate one of the multiple options alone, they may rate that option differently than if they were able to compare all options presented to them at the same time.
Consider a case where we are conducting user testing on a product page from our website.
We have created two mock-ups that we’d like to test. One with our current design and one with our competitor’s design.
If we have 20 participants to test the 2 designs with, should we show the 2 designs to all 20 participants? Or rather, should we show 10 participants our design only and the other 10 participants only our competitor’s design?
Put another way, the question here is whether we should show the customers the designs as a ‘single evaluation’ or a ‘joint evaluation’.
The approach we take should depend on the typical evaluation process employed by our customers.
Do they regularly visit both our and our competitor’s websites to compare our products? If so, then we should use a joint evaluation test, i.e. show them both designs to compare. Comparisons of multiple options are often undertaken when the purchase is large or confusing and more consideration is needed.
Alternatively, if our customers don’t usually visit both websites to compare products, then the single evaluation test is recommended to simulate their real-world process. In other words, we should only show 1 design to each participant. Half the participants will see our design and the other will see our competitor’s. Examples of customers making a single evaluation only can be found in smaller, simple purchases with low chance of regret. Also, customers logging into your self-service portal are unlikely to be also logging in to your competitor’s self-service portal at the same time.
