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The Dilemma Of Choice

August 1, 2010

Having choice carries a cost.

That is the theme of a book – entitled Choice – by Renata Scalecl, Professor of Law at the London School of Economics. Although her selected topics relate largely to personal choices, there is much relevance to the dilemma of the corporate world – the buyer ‘faced with a bewildering range of options and with the feeling of looming censure for the wrong one’.

I am not aware of any specific research which has explored the economic cost of choice for the business buyer – the cost of exploring options; the cost of delay in making a selection; the cost of pressure for continuous re-evaluation, even after the decision has been made. There is no question that buyers and providers face added costs as a result of this uncertainty and the threat it represents to longer-term relationships.

Yet to what extent has the range of choice actually expanded? Certainly, buyers of goods and services can now realistically explore multiple geographic markets (itself a relatively complex and somewhat risky endeavor). For some categories of purchase, this has certainly resulted in the proliferation of choice; but in others, the difference may be minimal. And just as technology has enabled this potential explosion, so it has provided new tools (such as e-auction software) with which to control it.

Ms Salecl makes the observation that ‘the simplistic search for the perfect choice is not only impractical, but leads to misery’. To what extent have modern purchasing practices resulted in this misery – and how will we learn to control them by ensuring that they truly do deliver economic benefit?

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