Analysis paralysis: “There are too many options, I just can’t decide.”
Consumers freeze when too many choices are presented. Decision paralysis brought on by the inability to choose between options is typically the result of cognitive overload and fatigue.
Facing an uncertain future: “I know I should… but that can wait.”
Consumers strongly prefer present payoffs to future rewards. While the potential savings from a lower mortgage rate can be significant over 25 years, it may not create enough of a sense of urgency to offset the more immediate transaction costs of gathering information and switching now.
The impact of emotion on behaviour: “I worry about failure and I hate feeling dumb.”
Consumers are often overcome by fear of failure when presented with an important choice. They hate the idea of being forced to live with a sub-par option but, just as importantly, they worry about looking silly or stupid for having chosen poorly.
Loss aversion effect: “I’m worried about what I’ll lose… and not certain of the value of what I’ll gain.”
Consumers focus on what they may lose by changing provider. They put three times as much weight on what they’ll lose, compared with what they may gain.
Endowment effect: “I value what I have now more than something new.”
Consumers value things they’ve previously made a decision to acquire.
Status quo bias: “I prefer to stick with what I have… even if there’s a better alternative.”
Consumers value stability, preferring to stick with what they have.