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29 June 2020

Buy now, or wait for something better? Researchers take close look at what influences decisions

Waiting may not always be best when we have to make decisions without knowing if something better may come along at a later stage.

  • Decision-making can be difficult, especially when all options aren't available at the same time
  • Researchers recently conducted an experiment to find the link between such choices and human behaviour 
  • They found that our standards continue to drop as time passes

Decisions, decisions – making the best ones can be tough, especially when we have to make them quickly but want to avoid regretting them later. From simple questions such as: “Should I purchase that shirt?” to the more complex ones such as “Should I take this job?”, these pivotal questions can be even more difficult when options aren’t provided simultaneously, and better offers may come along later.

A team of researchers from the University of Zurich, Switzerland, wanted to investigate what the process is whereby people make decisions between options that aren't presented simultaneously – but come after each other, such as booking a flight ticket or looking for an apartment – and they have to ask themselves: “When is the right time to stop searching?” 

After analysing the test results of study 200 participants, and using mathematical modelling, their findings showed that our standards drop more and more in the course of our decision-making. Their work was published in Proceedings of the National Academy of Sciences of the United States of America (PNAS).

First study of its kind

"We have to make decisions like this countless times every day, from the small ones like looking for a parking space to the big ones like buying a house or even choosing a partner," said Christiane Baumann, a doctoral candidate in the Department of Psychology of the University of Zurich, in a news release published recently on the university’s website.

"However, until now, the way we behave in such situations has never been thoroughly examined."

Baumann and colleagues from the University of Bremen and Harvard University therefore went on to carry out several experiments to look further into this fascinating behaviour. In order to test their purchasing strategies, up to 200 participants were given purchasing decisions to make during several tests. 

One of the tests, for example, required participants to try to get a flight ticket as cheaply as possible. They were presented with 10 offers, one after the other, and as the time for the (fictional) departure date came nearer, the price fluctuated. At the end of the test, the researchers simulated these situations and developed a simple mathematical model to explain the strategy used by people in their decision-making process. 

Our standards drop as time passes by

By using a computer, it’s easy to find the best possible strategy process, but Baumann explained that it may not be the one people use: "... the human brain is not capable of carrying out the complex calculations that are required, so humans use a rather simplified strategy," says Baumann.

After analysing the experiments, it was confirmed that the optimal, but complex, strategy calculated by the computer wasn’t used by the participants. Instead, what they used was a linear threshold model. Baumann explained what this means: “The price that I am prepared to pay increases every day by the same amount. That is, the further along I am in the process, the higher the price I will accept.”

In a nutshell, when having to make decisions, our standards drop in the process of decision-making. This principle also applies beyond purchasing-related decisions, added Bumann, and can be seen in situations such as choosing a life partner: “At the beginning perhaps my standards are high. But over time they may lower so that in the end I may settle for someone I would have rejected in the beginning."

Results could help to better understand difficult decision-making

The experimental data led to Baumann developing a mathematical model that helps to better understand and predict human behaviour in difficult decision-making, ultimately helping with this process:

"In the current digital world, the amount of information available for decision-making can be overwhelming.

“Our work provides a starting point for a better understanding of when people succeed or fail in such tasks. That could enable us to structure decision-making problems, for example in online shopping, in such a way that people are supported in navigating the flood of data," Baumann said.

 
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