Alas, I did not. I spent a full hour torturing myself, searching in vain for some way to differentiate between my options. Why?
Because of Fredkin’s Paradox, which states:
In a situation where a choice must be made, as the options become more closely matched on utility, the decision becomes more difficult, but the consequences become less significant.
Stated in fantasy-football-eese, the choice between starting a pro-bowl player and a 3rd string scrub is simple while the consequences drastic. Conversely, because the expected utility of Quick and Cutler was virtually identical, the decision was impossibly difficult.
Fredkin’s Paradox pops up all over the place, especially when we make purchasing decisions. For example think about the last time you bought a car. The first decision – and the easiest – was what type of car you wanted. Did you need the minivan to ferry the rugrats about town or were you looking for the sporty little thing to counteract your mid-life crisis? It’s an incredibly important decision, but one that’s so obvious it requires virtually no thought.
But now that you’ve selected your car type, consider whether you want that car in navy blue or black. Navy blue or black? NAVY OR BLACK? It’s enough to make you want to forget the entire car-buying thing altogether…
…which is tragically what happens sometimes. The driving force behind Fredkin’s Paradox is the illusion of control; It’s the need for us as humans to feel as if our decisions are informed. It’s unsatisfying to the point of unnerving to make decisions based on the flip of a coin. Even if the outcomes are basically the same, and we end up wasting a lot of time along the way, our need for information is an appetite that is not easily satisfied.
This paralysis is in the face of both no information and overwhelming amounts of information is referred to as the paradox of choice. While Fredkin’s paradox haunts your purchase decisions, the paradox of choice is likely influencing many of your investment decisions.
Consider the following TED Talk regarding the paradox of coice. It’s 20 minutes long and from 2005, but it’s worth a watch in it’s entirety. Or you can skip to the 8 minute mark, where you’ll find this gem:
“We all know what’s good about it, so I’m going to talk about what’s bad about it. All of this choice has two effects, two negative effects on people. One effect, paradoxically, is that it produces paralysis, rather than liberation. With so many options to choose from, people find it very difficult to choose at all. I’ll give you one very dramatic example of this: a study that was done of investments in voluntary retirement plans. A colleague of mine got access to investment records from Vanguard, the gigantic mutual fund company of about a million employees and about 2,000 different workplaces. And what she found is that for every 10 mutual funds the employer offered, rate of participation went down two percent. You offer 50 funds — 10 percent fewer employees participate than if you only offer five. Why? Because with 50 funds to choose from, it’s so damn hard to decide which fund to choose that you’ll just put it off until tomorrow. And then tomorrow, and then tomorrow, and tomorrow, and tomorrow, and of course tomorrow never comes. Understand that not only does this mean that people are going to have to eat dog food when they retire because they don’t have enough money put away, it also means that making the decision is so hard that they pass up significant matching money from the employer. By not participating, they are passing up as much as 5,000 dollars a year from the employer, who would happily match their contribution. So paralysis is a consequence of having too many choices.”
As for my fantasy team, I started Brian Quick over Jay Cutler and it turned out to be a bad decision. Before I knew about Fredkin’s paradox, I would have committed to redoubling my efforts and doing even more research in a futile attempt to make the right choice next time. But with this newfound knowledge, the thing that I’m most upset about isn’t that I lost, but that I took a full hour doing so. It’s a mistake I won’t make again.