ANTI-CHOICE ARGUMENTS AND ADAPTIVE INSTITUTIONAL DESIGN

Lynne Kiesling

Back home, enjoying the early morning alertness that comes with east-west-flying jet lag … one of the first places I went was Virginia Postrel’s new Forbes column on the Barry Schwartz & Company anti-choice literature. I’ve always found these anti-choice arguments unpersuasive; at worst you can argue that too much choice can increase your search costs and possible create ex post regret, but the benefits of increased choice so substantially outweigh those costs that I give such anti-choice arguments little credence.

I think Virginia provides a good insight into why such arguments are incorrect:

The fundamental problem with Schwartz’s critique, however, isn’t the author’s leftist preferences. It’s the difference between understanding the human mind and understanding market institutions. Psychology experiments often screen out the adjustments real people use to cope with choices, from brand loyalty to expert guidance. Markets, by contrast, produce not only more choice but also more ways to choose effectively.

If having too many choices is overwhelming, that suggests a new round of entrepreneurial opportunities. Offer customers abundant choices, but also help them search. Amazon does that with its many recommendation services. So does TiVo. So do Home Depot’s Expo Design Centers, which offer interior design services along with hundreds of faucets and floor coverings.

She’s absolutely right. I find the myriad ways that humans adapt creatively to changing environments both mind-boggling and inspirational. Many of them are difficult to isolate and difficult to articulate until you see them and use them. Take as an example some of the design changes to the MyEbay interface. As more people used the interface both as buyers and sellers, users provided Ebay with feedback on what kind of features they would find useful. Ebay incorporates those changes into occasional interface redesigns, making the MyEbay interface a much better way of managing the overwhelming amount of choice and information on Ebay than it used to be. MyEbay is precisely the kind of institutional innovation that bubbles up from the experiences of the Ebay community members and provides a valuable way to manage choices that have increased by orders of magnitude.

Which brings me to the other place I got back in the groove this morning over my tea: On Tuesday Grant McCracken had a post about Meg Whitman, Ebay’s CEO. He is exploring the characteristics that a Disney CEO should have, and here he isolates Whitman’s customer-oriented focus and the extent to which she promulgated a culture and a business of gathering and incorporating distributed knowledge from the many, many Ebay users.