This idea is why stores like Trader Joes or Stew Leonard's offer fewer choices (and get higher sales) as a result.
The Burden of Choice | Psychology Today:
"In an experiment examining the effects of choice on happiness, Iyengar and Lepper randomized individuals to either a group in which they could choose from 30 types of chocolate or a group in which they could choose from six types of chocolate. While subjects initially reported liking having the choice of 30 chocolates, they ended up being more dissatisfied and regretful of the choices they made than those who only had the choice of six. Barry Schwartz, the author of The Paradox of Choice, elaborates on this phenomenon, emphasizing that regret avoidance and anticipated regret are some of the most detrimental effects of overchoice. He states, 'the more options there are, the more likely one will make a non-optimal choice, and this prospect undermines whatever pleasure one may get from one's actual choice.'"Financial Implications:
* Offering more fund choices for 401K plans or insurance options may be detrimental.
* Keep it Simple Stupid
* Heuristics can make sense since they serve as filters to remove some choices.
* We can get overwhelmed by choices and procrastinate and end up doing nothing.