When Fewer Choices Are Worth More
Hanna Halaburda, Mikolaj Piskorski and Pinar Yildirim
Knowledge@Wharton | Marketing | Sept 23, 2014
In matching environments such as the world of online dating and labor markets, it’s not enough to find someone you like — you also have to find someone who likes you back. Competition is the name of the game, and if the field is crowded, how is a person able to stand out?
For those who are sick of being alone, weary of being asked when they plan to get married or otherwise sensing that their time is running out, the solution may be to limit their choices — and, more importantly, the options of others. It’s more than just a successful dating strategy; it also may be a lucrative business model. New research by Hanna Halaburda, an economist at the Bank of Canada and former Harvard Business School professor, Mikolaj Piskorski, professor of Strategy and Innovation at IMD Business School in Switzerland, and Wharton marketing professor Pinar Yildirim finds that not only can companies offer limited choices to consumers and still successfully compete with their peers, but may also be able to charge more.
“You want to satisfy the customer and you want the customer to find the best possible match, so the idea of limiting options at first sounds really counterintuitive,” Yildirim notes.