Sheena Iyengar: How to make choosing easier

564,833 views ใƒป 2012-01-19

TED


ืื ื ืœื—ืฅ ืคืขืžื™ื™ื ืขืœ ื”ื›ืชื•ื‘ื™ื•ืช ื‘ืื ื’ืœื™ืช ืœืžื˜ื” ื›ื“ื™ ืœื”ืคืขื™ืœ ืืช ื”ืกืจื˜ื•ืŸ.

ืžืชืจื’ื: Sigal Tifferet ืžื‘ืงืจ: Ido Dekkers
00:15
Do you know how many choices you make
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ื”ืื ืืชื ื™ื•ื“ืขื™ื ื›ืžื” ื”ื—ืœื˜ื•ืช ืืชื ืžืงื‘ืœื™ื
00:17
in a typical day?
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ื‘ื™ื•ื ื˜ื™ืคื•ืกื™?
00:20
Do you know how many choices you make
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ื”ืื ืืชื ื™ื•ื“ืขื™ื ื›ืžื” ื”ื—ืœื˜ื•ืช ืืชื ืžืงื‘ืœื™ื
00:22
in typical week?
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ื‘ืฉื‘ื•ืข ื˜ื™ืคื•ืกื™?
00:24
I recently did a survey
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ืขืจื›ืชื™ ืกืงืจ ืœืื—ืจื•ื ื”
00:26
with over 2,000 Americans,
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ืขืœ ืžืขืœ 2,000 ืืžืจื™ืงืื™ื,
00:28
and the average number of choices
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ื•ื›ืžื•ืช ื”ื”ื—ืœื˜ื•ืช ื”ืžืžื•ืฆืขืช
00:30
that the typical American reports making
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ืขืœื™ื” ืžื“ื•ื•ื— ื”ืืžืจื™ืงืื™ ื”ื˜ื™ืคื•ืกื™
00:32
is about 70 in a typical day.
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ื”ื™ื ื‘ืขืจืš 70 ื‘ื™ื•ื.
00:35
There was also recently a study done with CEOs
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ืœืื—ืจื•ื ื” ื ืขืจืš ื’ื ืžื—ืงืจ ืขืœ ืžื ื›"ืœื™ื
00:39
in which they followed CEOs around for a whole week.
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ื‘ื• ืขืงื‘ื• ืื—ืจ ืžื ื›"ืœื™ื ืฉื‘ื•ืข ืฉืœื.
00:42
And these scientists simply documented all the various tasks
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ื•ื”ืžื“ืขื ื™ื ื”ืืœื” ืชื™ืขื“ื• ืืช ื›ืœ ื”ืžื˜ืœื•ืช
00:45
that these CEOs engaged in
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ื‘ื”ืŸ ืขืกืงื• ื”ืžื ื›"ืœื™ื,
00:47
and how much time they spent engaging
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ื•ื›ืžื” ื–ืžืŸ ื”ื ื‘ื™ืœื•
00:49
in making decisions related to these tasks.
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ื‘ืงื‘ืœืช ื”ื—ืœื˜ื•ืช ื”ืงืฉื•ืจื•ืช ื‘ืžื˜ืœื•ืช ื”ืœืœื•.
00:51
And they found that the average CEO
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ื•ื”ื ืžืฆืื• ืฉื”ืžื ื›"ืœ ื”ืžืžื•ืฆืข
00:54
engaged in about 139 tasks in a week.
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ืžืขื•ืจื‘ ื‘ 139 ืžื˜ืœื•ืช ื‘ืฉื‘ื•ืข.
00:57
Each task was made up of many, many, many sub-choices of course.
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ื›ืœ ืžื˜ืœื” ื”ื™ืชื” ืžื•ืจื›ื‘ืช ื›ืžื•ื‘ืŸ ืžื”ืจื‘ื” ืžืื•ื“ ืชืช-ื”ื—ืœื˜ื•ืช.
01:01
50 percent of their decisions
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50% ืžื”ื”ื—ืœื˜ื•ืช ืฉืœื”ื
01:03
were made in nine minutes or less.
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ื ืขืฉื• ืชื•ืš 9 ื“ืงื•ืช ืื• ืคื—ื•ืช.
01:06
Only about 12 percent of the decisions
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ืจืง 12% ืžื”ื”ื—ืœื˜ื•ืช
01:09
did they make an hour or more of their time.
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ืฉื”ื ืงื™ื‘ืœื• ืœืงื—ื• ืฉืขื” ืื• ื™ื•ืชืจ ืžื–ืžื ื.
01:13
Think about your own choices.
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ื—ืฉื‘ื• ืขืœ ื”ื‘ื—ื™ืจื•ืช ืฉืœื›ื.
01:15
Do you know how many choices
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ืืชื ื™ื•ื“ืขื™ื ื›ืžื” ื‘ื—ื™ืจื•ืช
01:17
make it into your nine minute category
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ื ื›ื ืกื•ืช ืœืงื˜ื’ื•ืจื™ื” ืฉืœ 9 ื“ืงื•ืช
01:19
versus your one hour category?
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ืœืขื•ืžืช ื”ืงื˜ื’ื•ืจื™ื” ืฉืœ ื”ืฉืขื”?
01:21
How well do you think you're doing
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ืขื“ ื›ืžื” ืืชื ืžื ื”ืœื™ื ื”ื™ื˜ื‘
01:23
at managing those choices?
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ืืช ื”ื‘ื—ื™ืจื•ืช ื”ืืœื”?
01:26
Today I want to talk
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ื”ื™ื•ื ืื ื™ ืจื•ืฆื” ืœื“ื‘ืจ
01:28
about one of the biggest modern day choosing problems that we have,
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ืขืœ ืื—ืช ืžื‘ืขื™ื•ืช ื”ื‘ื—ื™ืจื” ื”ื’ื“ื•ืœื•ืช ื‘ื™ื•ืชืจ ื”ืงื™ื™ืžื•ืช ื›ื™ื•ื,
01:31
which is the choice overload problem.
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ื•ื”ื™ื ื‘ืขื™ื™ืช ืขื•ืžืก ื”ื‘ื—ื™ืจื”.
01:33
I want to talk about the problem
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ืื ื™ ืจื•ืฆื” ืœื”ืฆื™ื’ ืืช ื”ื‘ืขื™ื”
01:35
and some potential solutions.
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ื•ื›ืžื” ืคืชืจื•ื ื•ืช ืืคืฉืจื™ื™ื.
01:37
Now as I talk about this problem,
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ืขื›ืฉื™ื•, ื‘ื–ืžืŸ ืฉืื“ื‘ืจ,
01:39
I'm going to have some questions for you
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ืืฆื™ื’ ืœื›ื ื›ืžื” ืฉืืœื•ืช
01:41
and I'm going to want to know your answers.
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ื•ืืจืฆื” ืœื“ืขืช ืžื” ื”ืชืฉื•ื‘ื•ืช ืฉืœื›ื.
01:44
So when I ask you a question,
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ืื– ื›ืฉืื ื™ ืืฉืืœ ืืชื›ื ืฉืืœื”,
01:46
since I'm blind,
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ืžื›ื™ื•ื•ืŸ ืฉืื ื™ ืขื™ื•ื•ืจืช,
01:48
only raise your hand if you want to burn off some calories.
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ืจืง ืชืจื™ืžื• ืืช ื”ื™ื“ ืื ืืชื ืจื•ืฆื™ื ืœืฉืจื•ืฃ ื›ืžื” ืงืœื•ืจื™ื•ืช.
01:51
(Laughter)
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(ืฆื—ื•ืง)
01:54
Otherwise, when I ask you a question,
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ืื—ืจืช, ืื ืืฉืืœ ืืชื›ื ืฉืืœื”,
01:56
and if your answer is yes,
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ื•ื”ืชืฉื•ื‘ื” ืฉืœื›ื ื”ื™ื ื›ืŸ,
01:58
I'd like you to clap your hands.
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ืื ื™ ืจื•ืฆื” ืฉืชืžื—ืื• ื›ืคื™ื™ื.
02:00
So for my first question for you today:
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ืื– ื”ืฉืืœื” ื”ืจืืฉื•ื ื” ืฉืœื™ ืขื‘ื•ืจื›ื ื”ื™ื:
02:03
Are you guys ready to hear about the choice overload problem?
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ื”ืื ืืชื ืžื•ื›ื ื™ื ืœืฉืžื•ืข ืขืœ ื‘ืขื™ื™ืช ืขื•ืžืก ื”ื‘ื—ื™ืจื”?
02:06
(Applause)
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(ืžื—ื™ืื•ืช ื›ืคื™ื™ื)
02:08
Thank you.
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ืชื•ื“ื”.
02:11
So when I was a graduate student at Stanford University,
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ืื– ื›ืฉืื ื™ ื”ื™ื™ืชื™ ืกื˜ื•ื“ื ื˜ื™ืช ืœืชื•ืืจ ืฉื ื™ ื‘ืื•ื ื™ื‘ืจืกื™ื˜ืช ืกื˜ื ืคื•ืจื“,
02:13
I used to go to this very, very upscale grocery store;
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ื ื”ื’ืชื™ ืœืœื›ืช ืœืžื›ื•ืœืช ืžืื•ื“ ื™ื•ืงืจืชื™ืช,
02:16
at least at that time it was truly upscale.
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ืœืคื—ื•ืช ื‘ื–ืžื ื• ื”ื™ื ื”ื™ืชื” ื™ื•ืงืจืชื™ืช.
02:18
It was a store called Draeger's.
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ืงืจืื• ืœื” "ื“ืจื™ื™ื’ืจืก".
02:21
Now this store, it was almost like going to an amusement park.
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ืขื›ืฉื™ื•, ื–ื” ื”ื™ื” ื›ืžืขื˜ ื›ืžื• ืœืœื›ืช ืœืœื•ื ื” ืคืืจืง.
02:24
They had 250 different kinds of mustards and vinegars
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ื”ื™ื• ืœื”ื 250 ืกื•ื’ื™ ื—ืจื“ืœ ื•ื—ื•ืžืฅ,
02:27
and over 500 different kinds
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ื•ืžืขืœ 500 ืกื•ื’ื™ื ืฉื•ื ื™ื
02:29
of fruits and vegetables
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ืฉืœ ื™ืจืงื•ืช ื•ืคื™ืจื•ืช
02:31
and more than two dozen different kinds of bottled water --
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ื•ื™ื•ืชืจ ืž 20 ืกื•ื’ื™ื ืฉืœ ืžื™ื ืžื™ื ืจืœื™ื™ื -
02:34
and this was during a time when we actually used to drink tap water.
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ื•ื–ื” ื”ื™ื” ื‘ืชืงื•ืคื” ื‘ื” ื ื”ื’ื ื• ืขื•ื“ ืœืฉืชื•ืช ืžื™ื ืžื”ื‘ืจื–.
02:38
I used to love going to this store,
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ืื”ื‘ืชื™ ืœืœื›ืช ืœื—ื ื•ืช ื”ื–ื•,
02:41
but on one occasion I asked myself,
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ืื‘ืœ ืคืขื ืื—ืช ืฉืืœืชื™ ืืช ืขืฆืžื™,
02:43
well how come you never buy anything?
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ืื– ืœืžื” ืืช ืืฃ ืคืขื ืœื ืงื•ื ื” ืฉื•ื ื“ื‘ืจ?
02:45
Here's their olive oil aisle.
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ื”ื ื” ืื™ื–ื•ืจ ืฉืžืŸ ื”ื–ื™ืช.
02:47
They had over 75 different kinds of olive oil,
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ื”ื™ื• ืœื”ื ืžืขืœ 75 ืกื•ื’ื™ื ืฉื•ื ื™ื ืฉืœ ืฉืžืŸ ื–ื™ืช,
02:49
including those that were in a locked case
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ื›ื•ืœืœ ื›ืืœื” ืฉื”ื™ื• ื ืขื•ืœื™ื ื‘ืชื•ืš ืชื™ื‘ื”
02:51
that came from thousand-year-old olive trees.
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ืฉื ื•ืฆืจื• ืžืขืฆื™ ื–ื™ืช ื‘ื ื™ 1000 ืฉื ื”.
02:55
So I one day decided to pay a visit to the manager,
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ืื– ื™ื•ื ืื—ื“ ื”ื—ืœื˜ืชื™ ืœื‘ืงืจ ืืช ื”ืžื ื”ืœ,
02:57
and I asked the manager,
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ื•ืฉืืœืชื™ ืื•ืชื•
02:59
"Is this model of offering people all this choice really working?"
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"ื”ืื ื”ืžื•ื“ืœ ื”ื–ื” ื‘ื• ืืชื ืžืฆื™ืขื™ื ืœืื ืฉื™ื ืืช ื›ืœ ื”ืžื‘ื—ืจ ื”ื–ื” ื‘ืืžืช ืขื•ื‘ื“?"
03:02
And he pointed to the busloads of tourists
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ื•ื”ื•ื ื”ืฆื‘ื™ืข ืขืœ ืื•ื˜ื•ื‘ื•ืกื™ื ืžืœืื™ื ื‘ืชื™ื™ืจื™ื
03:04
that would show up everyday,
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ืฉื”ื™ื• ืžื’ื™ืขื™ื ื›ืœ ื™ื•ื,
03:06
with cameras ready usually.
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ื‘ื“"ื› ืขื ืžืฆืœืžื•ืช ืฉืœื•ืคื•ืช.
03:08
We decided to do a little experiment,
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ื•ื”ื—ืœื˜ื ื• ืœืขืจื•ืš ื ื™ืกื•ื™ ืงื˜ืŸ,
03:11
and we picked jam for our experiment.
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ื•ื‘ื—ืจื ื• ื‘ืจื™ื‘ื” ืขื‘ื•ืจ ื”ื ื™ืกื•ื™ ืฉืœื ื•.
03:13
Here's their jam aisle.
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ื”ื ื” ืื™ื–ื•ืจ ื”ืจื™ื‘ื•ืช.
03:15
They had 348 different kinds of jam.
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ื”ื™ื• ืœื”ื 348 ืกื•ื’ื™ ืจื™ื‘ื”.
03:17
We set up a little tasting booth
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ื”ืงืžื ื• ื“ื•ื›ืŸ ื˜ืขื™ืžื” ืงื˜ืŸ,
03:19
right near the entrance of the store.
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ืžืžืฉ ื‘ื›ื ื™ืกื” ืœื—ื ื•ืช.
03:21
We there put out six different flavors of jam
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ืฉืžื ื• ืฉื 6 ื˜ืขืžื™ ืจื™ื‘ื”,
03:23
or 24 different flavors of jam,
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ืื• 24 ื˜ืขืžื™ื,
03:26
and we looked at two things:
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ื•ื‘ื“ืงื ื• ืฉื ื™ ื“ื‘ืจื™ื:
03:28
First, in which case
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ืจืืฉื™ืช, ื‘ืื™ื–ื” ืžืงืจื”
03:30
were people more likely to stop, sample some jam?
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ืื ืฉื™ื ื ืขืฆืจื• ื™ื•ืชืจ ื›ื“ื™ ืœื˜ืขื•ื ืืช ื”ืจื™ื‘ื”?
03:33
More people stopped when there were 24, about 60 percent,
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ื™ื•ืชืจ ืื ืฉื™ื ืขืฆืจื• ื›ืฉื”ื™ื• 24 ื˜ืขืžื™ื, ื‘ืขืจืš 60%,
03:36
than when there were six,
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ืœืขื•ืžืช ื”ืฆื’ื” ืฉืœ 6 ื˜ืขืžื™ื,
03:38
about 40 percent.
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ืฉืื– ืขืฆืจื• ื‘ืขืจืš 40%.
03:40
The next thing we looked at
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ื”ื“ื‘ืจ ื”ืฉื ื™ ืฉื‘ื“ืงื ื•
03:42
is in which case were people more likely
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ื”ื™ื” ื‘ืื™ื–ื” ืžืงืจื” ืื ืฉื™ื ื ื˜ื• ื™ื•ืชืจ
03:44
to buy a jar of jam.
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ืœืงื ื•ืช ืฆื ืฆื ืช ืจื™ื‘ื”.
03:46
Now we see the opposite effect.
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ืขื›ืฉื™ื• ืจืื™ื ื• ืืช ื”ืืคืงื˜ ื”ื”ืคื•ืš.
03:48
Of the people who stopped when there were 24,
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ืžืชื•ืš ืืœื” ืฉืขืฆืจื• ืœ 24 ื˜ืขืžื™ื,
03:50
only three percent of them actually bought a jar of jam.
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ืจืง 3% ืงื ื• ืฆื ืฆื ืช ืจื™ื‘ื”.
03:53
Of the people who stopped when there were six,
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ืžืชื•ืš ืืœื” ืฉืขืฆืจื• ืœ 6 ื˜ืขืžื™ื,
03:56
well now we saw that 30 percent of them
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30% ืžื”ื
03:58
actually bought a jar of jam.
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ืงื ื• ืฆื ืฆื ืช ืจื™ื‘ื”.
04:00
Now if you do the math,
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ืขื›ืฉื™ื•, ืื ืชื—ืฉื‘ื•,
04:02
people were at least six times more likely to buy a jar of jam
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ื”ืกื‘ื™ืจื•ืช ืœืงื ื•ืช ืฆื ืฆื ืช ืจื™ื‘ื” ื”ื™ืชื” ื’ื‘ื•ื”ื” ืคื™ ืฉืฉื”
04:05
if they encountered six
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ืื ื”ื ืคื’ืฉื• 6 ื˜ืขืžื™ื
04:07
than if they encountered 24.
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ืœืขื•ืžืช 24.
04:09
Now choosing not to buy a jar of jam
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ืขื›ืฉื™ื•, ื”ื‘ื—ื™ืจื” ืฉืœื ืœืงื ื•ืช ืจื™ื‘ื”
04:11
is probably good for us --
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ื”ื™ื ื›ื ืจืื” ื˜ื•ื‘ื” ืขื‘ื•ืจื ื• -
04:13
at least it's good for our waistlines --
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ืœืคื—ื•ืช ืœืงื• ื”ืžื•ืชืŸ ืฉืœื ื• -
04:15
but it turns out that this choice overload problem affects us
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ืื‘ืœ ืžืชื‘ืจืจ ืฉื‘ืขื™ื™ืช ืขื•ืžืก ื”ื‘ื—ื™ืจื” ื”ื–ื• ืžืฉืคื™ืขื” ืขืœื™ื ื•
04:18
even in very consequential decisions.
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ื’ื ื‘ื”ื—ืœื˜ื•ืช ืจื‘ื•ืช ืžืฉืžืขื•ืช.
04:21
We choose not to choose,
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ืื ื—ื ื• ื‘ื•ื—ืจื™ื ืฉืœื ืœื‘ื—ื•ืจ,
04:23
even when it goes against our best self-interests.
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ืืคื™ืœื• ื›ืฉื–ื” ืžื ื•ื’ื“ ืœืื™ื ื˜ืจืก ืฉืœื ื•.
04:26
So now for the topic of today: financial savings.
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ืื– ืขื›ืฉื™ื• ืœื ื•ืฉื ืฉืœ ื”ื™ื•ื: ื—ืกื›ื•ืŸ ื›ืกืคื™.
04:29
Now I'm going to describe to you a study I did
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ืื ื™ ืืชืืจ ืœื›ื ืžื—ืงืจ ืฉืขืจื›ืชื™
04:33
with Gur Huberman, Emir Kamenica, Wei Jang
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ืขื ื’ื•ืจ ื”ื•ื‘ืจืžืŸ, ืืžื™ืจ ืงืžื ื™ืงื”, ื•ื•ืื™ ื™ืื ื’,
04:36
where we looked at the retirement savings decisions
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ื‘ื• ื‘ื—ื ื• ื”ื—ืœื˜ื•ืช ืขืœ ื—ืกื›ื•ืŸ ืœืคื ืกื™ื”
04:40
of nearly a million Americans
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ืฉืœ ื›ืžืขื˜ ืžื™ืœื™ื•ืŸ ืืžืจื™ืงืื™ื
04:43
from about 650 plans
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ืžื‘ืขืจืš 650 ืชื›ื ื™ื•ืช
04:46
all in the U.S.
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ื‘ื›ืœ ืจื—ื‘ื™ ืืจื”"ื‘.
04:48
And what we looked at
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ื•ืžื” ืฉื”ืกืชื›ืœื ื• ืขืœื™ื•
04:50
was whether the number of fund offerings
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ื”ื™ื” ืื ืžืกืคืจ ื”ื”ืฆืขื•ืช ืœืงืจื ื•ืช
04:52
available in a retirement savings plan,
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ื”ืงื™ื™ื ื‘ืชื›ื ื™ืช ืคื ืกื™ื”,
04:54
the 401(k) plan,
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ืชื›ื ื™ืช 401(k)
04:56
does that affect people's likelihood
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ืžืฉืคื™ืข ืขืœ ืกื™ื›ื•ื™ื• ืฉืœ ื”ืื“ื
04:58
to save more for tomorrow.
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ืœื—ืกื•ืš ื™ื•ืชืจ ืœืขืชื™ื“.
05:00
And what we found
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ื•ืžื” ืฉืžืฆืื ื•
05:02
was that indeed there was a correlation.
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ื”ื•ื ืฉืื›ืŸ ื”ื™ื” ืžืชืื.
05:05
So in these plans, we had about 657 plans
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ืื– ื‘ืชื›ื ื™ื•ืช ื”ืืœื”, ื”ื™ื• ืœื ื• ื‘ืขืจืš 657 ืชื›ื ื™ื•ืช
05:08
that ranged from offering people
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ืฉื”ืฆื™ืขื• ื‘ื™ืŸ 2 ื•ืขื“
05:10
anywhere from two to 59 different fund offerings.
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59 ื”ืฆืขื•ืช ืœืงืจื ื•ืช.
05:13
And what we found was that,
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ื•ืžื” ืฉืžืฆืื ื• ื”ื•ื
05:15
the more funds offered,
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ืฉื›ื›ืœ ืฉื”ืฆื™ืขื• ื™ื•ืชืจ ืงืจื ื•ืช,
05:17
indeed, there was less participation rate.
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ืื›ืŸ, ืฉื™ืขื•ืจ ื”ื”ืฉืชืชืคื•ืช ืงื˜ืŸ.
05:20
So if you look at the extremes,
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ืื– ืื ืชืกืชื›ืœื• ืขืœ ื”ืงืฆื•ื•ืช,
05:22
those plans that offered you two funds,
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ื‘ืชื›ื ื™ื•ืช ืฉื”ืฆื™ืขื• ืœื›ื ืฉืชื™ ืงืจื ื•ืช,
05:24
participation rates were around in the mid-70s --
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ืฉื™ืขื•ืจื™ ื”ื”ืฉืชืชืคื•ืช ื”ื™ื• ื‘ืกื‘ื™ื‘ื•ืช ื” 75 -
05:27
still not as high as we want it to be.
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ืขื“ื™ื™ืŸ ืœื ื’ื‘ื•ื” ื›ืคื™ ืฉื”ื™ื™ื ื• ืจื•ืฆื™ื.
05:29
In those plans that offered nearly 60 funds,
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ื‘ืชื›ื ื™ื•ืช ืฉื”ืฆื™ืขื• ื›ืžืขื˜ 60 ืงืจื ื•ืช,
05:32
participation rates have now dropped
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ืฉื™ืขื•ืจื™ ื”ื”ืฉืชืชืคื•ืช ื ืคืœื•
05:35
to about the 60th percentile.
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ื‘ืขืจืš ืœืื—ื•ื–ื•ืŸ ื” 60.
05:38
Now it turns out
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ืขื›ืฉื™ื•, ืžืชื‘ืจืจ
05:40
that even if you do choose to participate
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ืฉื’ื ืื ืชื‘ื—ืจื• ืœื”ืฉืชืชืฃ
05:43
when there are more choices present,
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ื›ืฉืงื™ื™ืžื•ืช ื™ื•ืชืจ ืืคืฉืจื•ื™ื•ืช ื‘ื—ื™ืจื”,
05:45
even then, it has negative consequences.
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ื’ื ืื–, ื™ืฉ ืœื›ืš ื”ืฉืœื›ื•ืช ืฉืœื™ืœื™ื•ืช.
05:48
So for those people who did choose to participate,
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ืื– ืขื‘ื•ืจ ืื•ืชื ืื ืฉื™ื ืฉื‘ื—ืจื• ื›ืŸ ืœื”ืฉืชืชืฃ,
05:51
the more choices available,
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ื›ื›ืœ ืฉื”ื™ื• ื™ื•ืชืจ ืืคืฉืจื•ื™ื•ืช ื‘ื—ื™ืจื”,
05:53
the more likely people were
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ื›ืš ืขืœื” ื”ืกื™ื›ื•ื™ ืฉื”ื
05:55
to completely avoid stocks or equity funds.
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ื™ื™ืžื ืขื• ืœื’ืžืจื™ ืžืžื ื™ื•ืช ืื• ืžืงืจื ื•ืช ืžื ื™ื•ืช.
05:58
The more choices available,
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ื›ื›ืœ ืฉื”ื™ื• ื™ื•ืชืจ ืืคืฉืจื•ื™ื•ืช ื‘ื—ื™ืจื”,
06:00
the more likely they were
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ื›ืš ืขืœื” ื”ืกื™ื›ื•ื™ ืฉื”ื
06:02
to put all their money in pure money market accounts.
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ื™ืฉื™ืžื• ืืช ื›ืœ ื›ืกืคื ื‘ืชื›ื ื™ื•ืช ื—ืกื›ื•ืŸ.
06:04
Now neither of these extreme decisions
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ืขื›ืฉื™ื• ืืฃ ืื—ืช ืžื”ื”ื—ืœื˜ื•ืช ื”ืงื™ืฆื•ื ื™ื•ืช ื”ืืœื”
06:06
are the kinds of decisions
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ืื™ื ื” ื”ื—ืœื˜ื” ืžื”ืกื•ื’
06:08
that any of us would recommend for people
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ืขืœื™ื” ื”ื™ื™ื ื• ืžืžืœื™ืฆื™ื
06:10
when you're considering their future financial well-being.
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ืœืžื™ ืฉืžืชื›ื ืŸ ืืช ืขืชื™ื“ื• ื”ืคื™ื ื ืกื™.
06:13
Well, over the past decade,
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ืื–, ื‘ืžื”ืœืš ื”ืขืฉื•ืจ ื”ืื—ืจื•ืŸ,
06:15
we have observed three main negative consequences
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ื”ื‘ื—ื ื• ื‘ืฉืœื•ืฉ ื”ืฉืœื›ื•ืช ืฉืœื™ืœื™ื•ืช
06:18
to offering people more and more choices.
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ืฉืœ ืœื”ืฆื™ืข ืœืื ืฉื™ื ื™ื•ืชืจ ื•ื™ื•ืชืจ ืืคืฉืจื•ื™ื•ืช.
06:21
They're more likely to delay choosing --
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ื”ื ื™ื˜ื• ื™ื•ืชืจ ืœื“ื—ื•ืช ืืช ื”ื‘ื—ื™ืจื” -
06:23
procrastinate even when it goes against their best self-interest.
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ื“ื—ื™ื™ื ื•ืช ื”ืžื ื•ื’ื“ืช ื’ื ืœืื™ื ื˜ืจืก ืฉืœื”ื.
06:26
They're more likely to make worse choices --
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ื”ื ื™ื˜ื• ื™ื•ืชืจ ืœื‘ื—ื•ืจ ื‘ื—ื™ืจื•ืช ื’ืจื•ืขื•ืช -
06:28
worse financial choices, medical choices.
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ื‘ื—ื™ืจื•ืช ืคื™ื ื ืกื™ื•ืช ื’ืจื•ืขื•ืช, ื‘ื—ื™ืจื•ืช ืจืคื•ืื™ื•ืช.
06:31
They're more likely to choose things that make them less satisfied,
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ื”ื ื™ื˜ื• ืœื‘ื—ื•ืจ ื“ื‘ืจื™ื ืฉื™ื’ืจืžื• ืœื”ื ืœื”ื™ื•ืช ืคื—ื•ืช ืžืจื•ืฆื™ื,
06:34
even when they do objectively better.
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ืืคืœื™ื• ื›ืฉืื•ื‘ื™ื™ืงื˜ื™ื‘ื™ืช ืžืฆื‘ื ื”ืฉืชืคืจ.
06:37
The main reason for this
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ื”ืกื™ื‘ื” ื”ืžืจื›ื–ื™ืช ืœื›ืš
06:39
is because, we might enjoy gazing at those giant walls
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ื”ื™ื ืฉืื ื—ื ื• ืื•ืœื™ ื ื”ื ื™ื ืœื‘ื”ื•ืช ื‘ืื•ืชื ืงื™ืจื•ืช ืขืฆื•ืžื™ื
06:43
of mayonnaises, mustards, vinegars, jams,
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ืฉืœ ืžื™ื•ื ื–, ื—ืจื“ืœ, ื—ื•ืžืฅ, ืจื™ื‘ื”,
06:45
but we can't actually do the math of comparing and contrasting
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ืื‘ืœ ืื ื—ื ื• ืœื ื‘ืืžืช ื™ื›ื•ืœื™ื ืœื—ืฉื‘, ืœื”ืฉื•ื•ืช ื•ืœื”ื ื’ื™ื“
06:48
and actually picking from that stunning display.
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ื•ื‘ืขืฆื ืœื‘ื—ื•ืจ ืžืชื•ืš ื”ืชืฆื•ื’ื” ื”ืžื”ืžืžืช ื”ื–ื•.
06:52
So what I want to propose to you today
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ืื– ืžื” ืฉืื ื™ ืจื•ืฆื” ืœื”ืฆื™ืข ืœื›ื ื”ื™ื•ื
06:54
are four simple techniques --
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ื”ืŸ 4 ื˜ื›ื ื™ืงื•ืช ืคืฉื•ื˜ื•ืช -
06:57
techniques that we have tested in one way or another
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ื˜ื›ื ื™ืงื•ืช ืฉื‘ื“ืงื ื• ื‘ืฆื•ืจื” ื–ื• ืื• ืื—ืจืช
07:00
in different research venues --
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ื‘ืžืกืœื•ืœื™ ืžื—ืงืจ ืฉื•ื ื™ื -
07:02
that you can easily apply
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ืฉืืชื ื™ื›ื•ืœื™ื ื‘ืงืœื•ืช ืœื™ื™ืฉื
07:04
in your businesses.
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ื‘ืขืกืงื™ื ืฉืœื›ื.
07:06
The first: Cut.
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ื”ืจืืฉื•ืŸ: ืงืฆืฆื•.
07:08
You've heard it said before,
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ื›ื‘ืจ ืฉืžืขืชื ืืช ื–ื”,
07:10
but it's never been more true than today,
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ืื‘ืœ ื”ื™ื•ื ื–ื” ื ื›ื•ืŸ ื™ื•ืชืจ ืžืชืžื™ื“,
07:12
that less is more.
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ืคื—ื•ืช ื”ื•ื ื™ื•ืชืจ.
07:14
People are always upset when I say, "Cut."
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ืื ืฉื™ื ืชืžื™ื“ ืžืชืขืฆื‘ื ื™ื ื›ืฉืื ื™ ืื•ืžืจืช "ืœืงืฆืฅ."
07:17
They're always worried they're going to lose shelf space.
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ื”ื ืชืžื™ื“ ืžื•ื“ืื’ื™ื ืฉื”ื ื™ืื‘ื“ื• ืฉื˜ื—ื™ ืžื“ืฃ.
07:19
But in fact, what we're seeing more and more
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ืื‘ืœ ืœืžืขืฉื”, ืžื” ืฉืื ื—ื ื• ืจื•ืื™ื ื™ื•ืชืจ ื•ื™ื•ืชืจ
07:22
is that if you are willing to cut,
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ื”ื•ื ืฉืื ืืชื ืžื•ื›ื ื™ื ืœืงืฆืฅ,
07:24
get rid of those extraneous redundant options,
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ืœื”ื™ืคืชืจ ืžืื•ืชืŸ ืืคืฉืจื•ื™ื•ืช ืžื™ื•ืชืจื•ืช ื•ื‘ืœืชื™ ื ื—ื•ืฆื•ืช,
07:26
well there's an increase in sales,
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ืื– ื™ืฉื ื” ืขืœื™ื™ื” ื‘ืžื›ื™ืจื•ืช,
07:28
there's a lowering of costs,
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ื™ืฉ ื™ืจื™ื“ื” ื‘ืขืœื•ื™ื•ืช,
07:30
there is an improvement of the choosing experience.
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ื™ืฉ ืฉื™ืคื•ืจ ืฉืœ ื—ื•ื•ื™ื™ืช ื”ื‘ื—ื™ืจื”.
07:34
When Proctor & Gamble
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ื›ืฉืคืจื•ืงื˜ื•ืจ ื•ื’ืžื‘ืœ
07:36
went from 26 different kinds of Head & Shoulders to 15,
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ืขื‘ืจื• ืž 26 ืกื•ื’ื™ ื”ื“ ืื ื“ ืฉื•ืœื“ืจืก ืœ 15,
07:38
they saw an increase in sales by 10 percent.
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ื”ื ืจืื• ืขืœื™ื™ื” ืฉืœ 10% ื‘ืžื›ื™ืจื•ืช.
07:41
When the Golden Cat Corporation
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ื›ืฉืชืื’ื™ื“ ื’ื•ืœื“ืŸ ืงื˜
07:43
got rid of their 10 worst-selling cat litter products,
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ื ืคืชืจ ืž10 ืžื•ืฆืจื™ ืคืกื•ืœืช ื”ื—ืชื•ืœื™ื ื”ืคื—ื•ืช ื ืžื›ืจื™ื,
07:45
they saw an increase in profits
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ื”ื ืจืื• ืขืœื™ื™ื” ื‘ืจื•ื•ื—ื™ื
07:47
by 87 percent --
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ืฉืœ 87% -
07:49
a function of both increase in sales
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ืชื•ืฆืื” ืฉืœ ืขืœื™ื™ื” ื‘ืžื›ื™ืจื•ืช
07:51
and lowering of costs.
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ื•ื™ืจื™ื“ื” ื‘ืขืœื•ื™ื•ืช.
07:53
You know, the average grocery store today
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ืืชื ื™ื•ื“ืขื™ื, ื”ืžื›ื•ืœืช ื”ืžืžื•ืฆืขืช ื›ื™ื•ื
07:55
offers you 45,000 products.
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ืžืฆื™ืขื” ืœื›ื 45,000 ืžื•ืฆืจื™ื.
07:57
The typical Walmart today offers you 100,000 products.
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ื—ื ื•ืช ื•ื•ืœืžืจื˜ ื˜ื™ืคื•ืกื™ืช ืžืฆื™ืขื” ืœื›ื 100,000 ืžื•ืฆืจื™ื.
08:00
But the ninth largest retailer,
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ืื‘ืœ ื”ืงืžืขื•ื ืื™ ื”ืชืฉื™ืขื™ ื‘ื’ื•ื“ืœื•,
08:05
the ninth biggest retailer in the world today
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ื”ืชืฉื™ืขื™ ื‘ื’ื•ื“ืœ ื‘ืขื•ืœื ื›ื™ื•ื,
08:07
is Aldi,
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ื”ื•ื ืืœื“ื™,
08:09
and it offers you only 1,400 products --
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ื•ื”ื•ื ืžืฆื™ืข ืœื›ื ืจืง 1,400 ืžื•ืฆืจื™ื -
08:12
one kind of canned tomato sauce.
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ืกื•ื’ ืื—ื“ ืฉืœ ืจืกืง ืขื’ื‘ื ื™ื•ืช.
08:15
Now in the financial savings world,
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ืขื›ืฉื™ื•, ื‘ืขื•ืœื ื”ื—ืกื›ื•ืŸ ื”ืคื™ื ื ืกื™,
08:17
I think one of the best examples that has recently come out
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ืื ื™ ื—ื•ืฉื‘ืช ืฉืื—ืช ื”ื“ื•ื’ืžืื•ืช ื”ื˜ื•ื‘ื•ืช ื‘ื™ื•ืชืจ ืฉื™ืฆืื” ืœืื—ืจื•ื ื”
08:20
on how to best manage the choice offerings
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ืขืœ ื”ื“ืจืš ื”ื˜ื•ื‘ื” ื‘ื™ื•ืชืจ ืœื ื”ืœ ืืคืฉืจื•ื™ื•ืช ื‘ื—ื™ืจื”
08:23
has actually been something that David Laibson was heavily involved in designing,
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ื”ื™ืชื” ื‘ืขืฆื ืžืฉื”ื• ืฉื“ื™ื™ื•ื™ื“ ืœื™ื™ื‘ืกื•ืŸ ื”ื™ื” ืžืขื•ืจื‘ ืžืื•ื“ ื‘ืชื›ื ื•ื ื•,
08:26
which was the program that they have at Harvard.
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ื•ื–ืืช ื”ืชื›ื ื™ืช ืฉืงื™ื™ืžืช ื‘ื”ืจื•ื•ืืจื“.
08:28
Every single Harvard employee
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ื›ืœ ืขื•ื‘ื“ ื‘ื”ืจื•ื•ืืจื“
08:30
is now automatically enrolled
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ื ืจืฉื ื›ื™ื•ื ืื•ื˜ื•ืžื˜ื™ืช
08:32
in a lifecycle fund.
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ืœืงืจืŸ ื ืืžื ื•ืช.
08:34
For those people who actually want to choose,
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ืœืžื™ ืฉืจื•ืฆื” ื‘ืืžืช ืœื‘ื—ื•ืจ,
08:36
they're given 20 funds,
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ื ื™ืชื ื•ืช 20 ืื•ืคืฆื™ื•ืช ืฉืœ ืงืจื ื•ืช,
08:38
not 300 or more funds.
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ืœื 300 ืงืจื ื•ืช ืื• ื™ื•ืชืจ.
08:40
You know, often, people say,
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ืืชื ื™ื•ื“ืขื™ื, ืœืคืขืžื™ื ืื ืฉื™ื ืื•ืžืจื™ื
08:42
"I don't know how to cut.
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"ืื ื™ ืœื ื™ื•ื“ืข ืื™ืš ืœืฆืžืฆื.
08:44
They're all important choices."
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ื”ืŸ ื›ื•ืœืŸ ืืคืฉืจื•ื™ื•ืช ื‘ื—ื™ืจื” ื—ืฉื•ื‘ื•ืช."
08:46
And the first thing I do is I ask the employees,
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ื•ื”ื“ื‘ืจ ื”ืจืืฉื•ืŸ ืฉืื ื™ ืขื•ืฉื” ื”ื•ื ืœืฉืื•ืœ ืืช ื”ืขื•ื‘ื“ื™ื,
08:49
"Tell me how these choices are different from one another.
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"ืชืืžืจื• ืœื™ ืื™ืš ื”ืืคืฉืจื•ื™ื•ืช ื”ืืœื” ืฉื•ื ื•ืช ื–ื• ืžื–ื•.
08:51
And if your employees can't tell them apart,
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ื•ืื ื”ืขื•ื‘ื“ื™ื ืฉืœื›ื ืœื ื™ื›ื•ืœื™ื ืœื”ื‘ื—ื™ืŸ ื‘ื™ื ื”ืŸ,
08:53
neither can your consumers."
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ืื– ื›ืš ื’ื ื”ืฆืจื›ื ื™ื ืฉืœื›ื."
08:56
Now before we started our session this afternoon,
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ืขื›ืฉื™ื•, ืœืคื ื™ ืฉื”ืชื—ืœื ื• ื‘ื”ืจืฆืื” ืฉืœื ื• ื”ื™ื•ื,
08:59
I had a chat with Gary.
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ื“ื™ื‘ืจืชื™ ืขื ื’ืืจื™.
09:01
And Gary said that he would be willing
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ื•ื’ืืจื™ ืืžืจ ืœื™ ืฉื”ื•ื ื”ื™ื” ืžื•ื›ืŸ
09:04
to offer people in this audience
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ืœื”ืฆื™ืข ืœืื ืฉื™ื ื‘ืงื”ืœ
09:06
an all-expenses-paid free vacation
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ื—ื•ืคืฉื” ื—ื™ื ื ื”ื›ืœ ื›ืœื•ืœ
09:09
to the most beautiful road in the world.
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ืœื“ืจืš ื”ื™ืคื” ื‘ื™ื•ืชืจ ื‘ืขื•ืœื.
09:13
Here's a description of the road.
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ื”ื ื” ื”ืชื™ืื•ืจ ืฉืœ ื”ื“ืจืš.
09:16
And I'd like you to read it.
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ื•ืื ื™ ืจื•ืฆื” ืฉืชืงืจืื• ืื•ืชื•.
09:18
And now I'll give you a few seconds to read it
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ื•ืื ื™ ืืชืŸ ืœื›ื ื›ืžื” ืฉื ื™ื•ืช ืœืงืจื•ื,
09:20
and then I want you to clap your hands
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ื•ืื– ืชืžื—ืื• ื›ืคื™ื™ื
09:22
if you're ready to take Gary up on his offer.
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ืืชื ืžืงื‘ืœื™ื ืืช ื”ื”ืฆืขื” ืฉืœ ื’ืืจื™.
09:24
(Light clapping)
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(ืžื—ื™ืื•ืช ืงืœื•ืช)
09:26
Okay. Anybody who's ready to take him up on his offer.
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ืื•ืงื™ื™. ื›ืœ ืžื™ ืฉืžื•ื›ืŸ ืœืงื‘ืœ ืืช ื”ื”ืฆืขื”.
09:29
Is that all?
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ื–ื” ื”ื›ืœ?
09:31
All right, let me show you some more about this.
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ืื•ืงื™ื™, ืชื ื• ืœื™ ืœื”ืจืื•ืช ืœื›ื ืขื•ื“ ื›ืžื” ืคืจื˜ื™ื.
09:34
(Laughter)
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(ืฆื—ื•ืง)
09:37
You guys knew there was a trick, didn't you.
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ื™ื“ืขืชื ืฉื™ื”ื™ื” ื›ืืŸ ื˜ืจื™ืง, ื ื›ื•ืŸ?
09:44
(Honk)
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(ืฆืคื™ืจื”)
09:46
Now who's ready to go on this trip.
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ืขื›ืฉื™ื• ืžื™ ืžื•ื›ืŸ ืœืฆืืช ืœื˜ื™ื•ืœ ื”ื–ื”?
09:49
(Applause)
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(ืžื—ื™ืื•ืช ื›ืคื™ื™ื)
09:51
(Laughter)
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(ืฆื—ื•ืง)
09:53
I think I might have actually heard more hands.
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ืื ื™ ื—ื•ืฉื‘ืช ืฉืฉืžืขืชื™ ื™ื•ืชืจ ืžื—ื™ืื•ืช ื›ืคื™ื™ื.
09:56
All right.
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ืื•ืงื™ื™.
09:58
Now in fact,
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ืขื›ืฉื™ื•, ืื•ื‘ื™ื™ืงื˜ื™ื‘ื™ืช,
10:00
you had objectively more information
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ื”ื™ื” ืœื›ื ื™ื•ืชืจ ืžื™ื“ืข
10:02
the first time around than the second time around,
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ื‘ืกื‘ื‘ ื”ืจืืฉื•ืŸ ืžืืฉืจ ื‘ืฉื ื™,
10:04
but I would venture to guess
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ืื‘ืœ ืื ื™ ืžื•ื›ื ื” ืœื”ืกืชื›ืŸ ื•ืœื ื—ืฉ
10:06
that you felt that it was more real the second time around.
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ืฉื”ืจื’ืฉืชื ืฉื–ื” ื™ื•ืชืจ ืืžื™ืชื™ ื‘ืกื‘ื‘ ื”ืฉื ื™.
10:10
Because the pictures made it feel
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ื›ื™ ื”ืชืžื•ื ื•ืช ื’ืจืžื•
10:12
more real to you.
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ืœืชื—ื•ืฉื” ืžืฆื™ืื•ืชื™ืช ื™ื•ืชืจ.
10:14
Which brings me to the second technique
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ื•ื–ื” ืžื‘ื™ื ืื•ืชื™ ืœื˜ื›ื ื™ืงื” ื”ืฉื ื™ื™ื”
10:16
for handling the choice overload problem,
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ืœื”ืชืžื•ื“ื“ื•ืช ืขื ื‘ืขื™ื™ืช ืขื•ืžืก ื”ื‘ื—ื™ืจื”,
10:18
which is concretization.
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ื•ื”ื™ื ืงื•ื ืงืจื˜ื™ื–ืฆื™ื”.
10:20
That in order for people to understand
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ื›ื“ื™ ืฉืื ืฉื™ื ื™ื•ื›ืœื• ืœื”ื‘ื™ืŸ
10:22
the differences between the choices,
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ืืช ื”ื”ื‘ื“ืœื™ื ื‘ื™ืŸ ื”ื‘ื—ื™ืจื•ืช,
10:24
they have to be able to understand
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ื”ื ืฆืจื™ื›ื™ื ืœื”ื™ื•ืช ืžืกื•ื’ืœื™ื ืœื”ื‘ื™ืŸ
10:26
the consequences associated with each choice,
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ืืช ื”ื”ืฉืœื›ื•ืช ื”ืงืฉื•ืจื•ืช ืœื›ืœ ื‘ื—ื™ืจื”,
10:29
and that the consequences need to be felt
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ื•ื”ื”ืฉืœื›ื•ืช ื”ืœืœื• ืฆืจื™ื›ื•ืช ืœื”ื™ื•ืช
10:32
in a vivid sort of way, in a very concrete way.
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ืžื•ื—ืฉื™ื•ืช, ื‘ืื•ืคืŸ ื—ื™ ืžืื•ื“.
10:36
Why do people spend an average of 15 to 30 percent more
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ืœืžื” ืื ืฉื™ื ืžื‘ื–ื‘ื–ื™ื ื‘ืžืžื•ืฆืข 15-30% ื™ื•ืชืจ
10:39
when they use an ATM card or a credit card
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ื›ืฉื”ื ืงื•ื ื™ื ืขื ื›ืจื˜ื™ืก ืืฉืจืื™
10:41
as opposed to cash?
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ืœืขื•ืžืช ืงื ื™ื™ื” ื‘ืžื–ื•ืžืŸ?
10:43
Because it doesn't feel like real money.
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ื›ื™ ื–ื” ืœื ืžืจื’ื™ืฉ ืœื”ื ื›ืžื• ื›ืกืฃ ืืžื™ืชื™.
10:45
And it turns out
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ื•ืžืชื‘ืจืจ
10:47
that making it feel more concrete
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ืฉื›ืฉื”ื•ืคื›ื™ื ืืช ื–ื” ืœื™ื•ืชืจ ืžื•ื—ืฉื™
10:49
can actually be a very positive tool
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ื–ื” ื™ื›ื•ืœ ืœื”ื™ื•ืช ื›ืœื™ ืžืื•ื“ ื—ื™ื•ื‘ื™
10:51
to use in getting people to save more.
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ืฉื™ื’ืจื•ื ืœืื ืฉื™ื ืœื—ืกื•ืš ื™ื•ืชืจ.
10:53
So a study that I did with Shlomo Benartzi
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ืื– ืžื—ืงืจ ืฉืขืจื›ืชื™ ืขื ืฉืœืžื” ื‘ืŸ-ืืจืฆื™
10:55
and Alessandro Previtero,
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ื•ืืœืกื ื“ืจื• ืคืจื‘ื™ื˜ืจื•,
10:57
we did a study with people at ING --
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ืขืจื›ื ื• ืžื—ืงืจ ืขื ืื ืฉื™ื ื‘ ING (ื‘ื ืง) -
11:01
employees that are all working at ING --
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ืขื•ื‘ื“ื™ื ื‘ื—ื‘ืจืช ING -
11:04
and now these people were all in a session
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ื•ื›ืœ ื”ืขื•ื‘ื“ื™ื ื”ืืœื” ื”ืฉืชืชืคื• ื‘ืกื“ื ื
11:06
where they're doing enrollment for their 401(k) plan.
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ืฉืœ ื”ืจืฉืžื” ืœืชื›ื ื™ืช ืคื ืกื™ื” 401(k).
11:09
And during that session,
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ื•ื‘ืžื”ืœืš ื”ืกื“ื ื ื”ื–ื•,
11:11
we kept the session exactly the way it used to be,
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ื”ืฉืืจื ื• ืืช ื”ืกื“ื ื ื‘ื“ื™ื•ืง ื›ืคื™ ืฉื”ื™ืชื”,
11:13
but we added one little thing.
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ืื‘ืœ ื”ื•ืกืคื ื• ืคืจื˜ ืงื˜ืŸ.
11:16
The one little thing we added
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ื”ืคืจื˜ ื”ืงื˜ืŸ ืฉื”ื•ืกืคื ื•
11:19
was we asked people
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ื”ื™ื” ืฉื‘ื™ืงืฉื ื• ืžืื ืฉื™ื
11:21
to just think about all the positive things that would happen in your life
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ืœื—ืฉื•ื‘ ืขืœ ื›ืœ ื”ื“ื‘ืจื™ื ื”ื—ื™ื•ื‘ื™ื™ื ืฉื™ืงืจื• ื‘ื—ื™ื™ื”ื
11:24
if you saved more.
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ืื™ืœื• ื”ื™ื• ื—ื•ืกื›ื™ื ื™ื•ืชืจ.
11:26
By doing that simple thing,
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ื‘ืฉืœ ื”ืชืจื’ื™ืœ ื”ืคืฉื•ื˜ ื”ื–ื”,
11:29
there was an increase in enrollment by 20 percent
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ื—ืœื” ืขืœื™ื™ื” ืฉืœ 20% ื‘ื”ืจืฉืžื”
11:32
and there was an increase in the amount of people willing to save
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ื•ื”ื™ืชื” ืขืœื™ื™ื” ืฉืœ ื›ืžื•ืช ื”ืื ืฉื™ื ืฉืจืฆื• ืœื—ืกื•ืš
11:35
or the amount that they were willing to put down into their savings account
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ืื• ืฉืœ ื”ืกื›ื•ื ืฉื”ื ื”ืกื›ื™ืžื• ืœืฉื™ื ื‘ืชื•ื›ื ื™ืช ื”ื—ืกื›ื•ืŸ ืฉืœื”ื
11:38
by four percent.
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ืฉืœ 4%.
11:40
The third technique: Categorization.
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ื”ื˜ื›ื ื™ืงื” ื”ืฉืœื™ืฉื™ืช: ืงื˜ื’ื•ืจื™ื–ืฆื™ื”.
11:43
We can handle more categories
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ืื ื—ื ื• ื™ื›ื•ืœื™ื ืœื”ืชืžื•ื“ื“ ืขื ื™ื•ืชืจ ืงื˜ื’ื•ืจื™ื•ืช
11:46
than we can handle choices.
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ืžืืฉืจ ืขื ืืคืฉืจื•ื™ื•ืช ื‘ื—ื™ืจื”.
11:48
So for example,
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ืื– ืœื“ื•ื’ืžื,
11:50
here's a study we did in a magazine aisle.
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ื”ื ื” ืžื—ืงืจ ืฉืขืจื›ื ื• ื‘ืื™ื–ื•ืจ ื”ืžื’ื–ื™ื ื™ื.
11:52
It turns out that in Wegmans grocery stores
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ืžืชื‘ืจืจ ืฉื‘ืžื›ื•ืœื•ืช ืฉืœ ื•ื•ื’ืžืŸ
11:54
up and down the northeast corridor,
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ื‘ืคืจื•ื–ื“ื•ืจ ื”ืฆืคื•ืŸ ืžื–ืจื—ื™,
11:56
the magazine aisles range anywhere
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ื ืžืฆื ืื™ื–ื•ืจ ื”ืžื’ื–ื™ื ื™ื ื”ื›ื•ืœืœ
11:58
from 331 different kinds of magazines
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ืž331 ืžื’ื–ื™ื ื™ื ืฉื•ื ื™ื
12:00
all the way up to 664.
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ืขื“ 664.
12:03
But you know what?
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ืื‘ืœ ืืชื ื™ื•ื“ืขื™ื?
12:05
If I show you 600 magazines
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ืื ืืจืื” ืœื›ื 600 ืžื’ื–ื™ื ื™ื
12:07
and I divide them up into 10 categories,
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ืžื—ื•ืœืงื™ื ืœ10 ืงื˜ื’ื•ืจื™ื•ืช,
12:10
versus I show you 400 magazines
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ืœืขื•ืžืช 400 ืžื’ื–ื™ื ื™ื
12:12
and divide them up into 20 categories,
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ืžื—ื•ืœืงื™ื ืœ20 ืงื˜ื’ื•ืจื™ื•ืช,
12:15
you believe that I have given you
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ืืชื ืชื—ืฉื‘ื• ืฉื ืชืชื™ ืœื›ื
12:17
more choice and a better choosing experience
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ื™ื•ืชืจ ื‘ื—ื™ืจื” ื•ื—ื•ื•ื™ืช ื‘ื—ื™ืจื” ื˜ื•ื‘ื” ื™ื•ืชืจ
12:19
if I gave you the 400
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ืื ืืชืŸ ืœื›ื ืืช ื” 400
12:21
than if I gave you the 600.
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ืœืขื•ืžืช ื” 600.
12:23
Because the categories tell me how to tell them apart.
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ื›ื™ ื”ืงื˜ื’ื•ืจื™ื•ืช ืื•ืžืจื•ืช ืœื™ ืื™ืš ืœื”ื‘ื—ื™ืŸ ื‘ื™ื ื”ื.
12:28
Here are two different jewelry displays.
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ื”ื ื” ืฉืชื™ ืชืฆื•ื’ื•ืช ืฉื•ื ื•ืช ืฉืœ ืชื›ืฉื™ื˜ื™ื.
12:31
One is called "Jazz" and the other one is called "Swing."
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ื”ืื—ืช ื ืงืจืืช "ื’'ื–", ื•ื”ืฉื ื™ื™ื” ื ืงืจืืช "ืกื•ื•ื™ื ื’."
12:34
If you think the display on the left is Swing
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ืื ืืชื ื—ื•ืฉื‘ื™ื ืฉื”ืชืฆื•ื’ื” ืžืฉืžืืœ ื”ื™ื ืกื•ื•ื™ื ื’
12:37
and the display on the right is Jazz,
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ื•ืžื™ืžื™ืŸ ื–ื” ื’'ื–,
12:40
clap your hands.
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ืžื—ืื• ื›ืคื™ื™ื.
12:42
(Light Clapping)
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(ืžืขื˜ ืžื—ื™ืื•ืช)
12:44
Okay, there's some.
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ืื•ืงื™ื™, ื™ืฉ ื›ืžื”.
12:46
If you think the one on the left is Jazz and the one on the right is Swing,
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ืื ืืชื ื—ื•ืฉื‘ื™ื ืฉืžืฉืžืืœ ื–ื” ื’'ื– ื•ืžื™ืžื™ืŸ ืกื•ื•ื™ื ื’,
12:48
clap your hands.
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ืžื—ืื• ื›ืคื™ื™ื.
12:50
Okay, a bit more.
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ืื•ืงื™ื™, ืงืฆืช ื™ื•ืชืจ.
12:52
Now it turns out you're right.
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ืื– ืžืชื‘ืจืจ ืฉืืชื ืฆื•ื“ืงื™ื.
12:54
The one on the left is Jazz and the one on the right is Swing,
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ืžืฉืžืืœ ื–ื” ื’'ื– ื•ืžื™ืžื™ืŸ ื–ื” ืกื•ื•ื™ื ื’,
12:56
but you know what?
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ืื‘ืœ ืืชื ื™ื•ื“ืขื™ื ืžื”?
12:58
This is a highly useless categorization scheme.
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ื”ื—ืœื•ืงื” ื”ื–ื• ืœืงื˜ื’ื•ืจื™ื•ืช ืžืžืฉ ื—ืกืจืช ืขืจืš.
13:01
(Laughter)
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(ืฆื—ื•ืง)
13:03
The categories need to say something
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ื”ืงื˜ื’ื•ืจื™ื•ืช ืฆืจื™ื›ื•ืช ืœื•ืžืจ ืžืฉื”ื•
13:06
to the chooser, not the choice-maker.
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ืœื‘ื•ื—ืจ, ืœื ืœื™ื•ืฆืจ ื”ื‘ื—ื™ืจื•ืช.
13:09
And you often see that problem
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ื•ืœืขื™ืชื™ื ืงืจื•ื‘ื•ืช ืืชื ืจื•ืื™ื ืืช ื”ื‘ืขื™ื” ื”ื–ื•
13:11
when it comes down to those long lists of all these funds.
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ื›ืฉืžื’ื™ืขื™ื ืœืจืฉื™ืžื•ืช ื”ืืจื•ื›ื•ืช ืฉืœ ื›ืœ ื”ืงืจื ื•ืช ื”ืืœื”.
13:14
Who are they actually supposed to be informing?
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ืืช ืžื™ ื”ืŸ ืืžื•ืจื•ืช ืœื™ื™ื“ืข?
13:18
My fourth technique: Condition for complexity.
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ื”ื˜ื›ื ื™ืงื” ื”ืจื‘ื™ืขื™ืช ืฉืœื™: ื”ืชื ื™ื™ื” ืœืžื•ืจื›ื‘ื•ืช.
13:21
It turns out we can actually
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ืžืชื‘ืจืจ ืฉืื ื—ื ื• ื‘ืขืฆื ืžืกื•ื’ืœื™ื
13:23
handle a lot more information than we think we can,
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ืœื”ืชืžื•ื“ื“ ืขื ื”ืจื‘ื” ื™ื•ืชืจ ืžื™ื“ืข ืžืžื” ืฉืื ื—ื ื• ื—ื•ืฉื‘ื™ื,
13:25
we've just got to take it a little easier.
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ืจืง ืฆืจื™ืš ืœืงื—ืช ืืช ื–ื” ื™ื•ืชืจ ื‘ืงืœื•ืช.
13:27
We have to gradually increase the complexity.
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ืื ื—ื ื• ืฆืจื™ื›ื™ื ื‘ื”ื“ืจื’ื” ืœื”ืขืœื•ืช ืืช ื”ืžื•ืจื›ื‘ื•ืช.
13:30
I'm going to show you one example of what I'm talking about.
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ืืจืื” ืœื›ื ื‘ื“ื•ื’ืžื ืื—ืช ืœืžื” ืื ื™ ืžืชื›ื•ื•ื ืช.
13:33
Let's take a very, very complicated decision:
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ื‘ื•ืื• ื ื™ืงื— ื”ื—ืœื˜ื” ืžืื•ื“ ืžืกื•ื‘ื›ืช:
13:35
buying a car.
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ืงื ื™ื™ืช ืจื›ื‘.
13:37
Here's a German car manufacturer
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ื”ื ื” ื™ืฆืจืŸ ืจื›ื‘ ื’ืจืžื ื™
13:39
that gives you the opportunity to completely custom make your car.
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ืฉื ื•ืชืŸ ืœื›ื ื”ื–ื“ืžื ื•ืช ืœื™ื™ืฆืจ ื‘ื”ื–ืžื ื” ืื™ืฉื™ืช ืืช ื”ืจื›ื‘ ืฉืœื›ื.
13:42
You've got to make 60 different decisions,
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ืืชื ืฆืจื™ื›ื™ื ืœืงื‘ืœ 60 ื”ื—ืœื˜ื•ืช ืฉื•ื ื•ืช,
13:44
completely make up your car.
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ืœืขืฆื‘ ืžื”ื™ืกื•ื“ ืืช ื”ืจื›ื‘ ืฉืœื›ื.
13:46
Now these decisions vary
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ืขื›ืฉื™ื• ื”ื”ื—ืœื˜ื•ืช ื”ืืœื” ืฉื•ื ื•ืช
13:48
in the number of choices that they offer per decision.
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ื‘ืžืกืคืจ ื”ื‘ื—ื™ืจื•ืช ืฉื”ืŸ ืžืฆื™ืขื•ืช ืœื›ืœ ื”ื—ืœื˜ื”.
13:51
Car colors, exterior car colors --
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ืฆื‘ืข ื”ืจื›ื‘, ื”ืฆื‘ืข ื”ื—ื™ืฆื•ื ื™ -
13:53
I've got 56 choices.
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ื™ืฉ ืœื™ 56 ืืคืฉืจื•ื™ื•ืช ื‘ื—ื™ืจื”.
13:55
Engines, gearshift -- four choices.
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ืžื ื•ืขื™ื, ื”ื™ืœื•ื›ื™ื - 4 ืืคืฉืจื•ื™ื•ืช.
13:58
So now what I'm going to do
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ืื– ืžื” ืฉืืขืฉื” ืขื›ืฉื™ื•
14:00
is I'm going to vary the order in which these decisions appear.
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ื–ื” ืœืฉื ื•ืช ืืช ื”ืกื“ืจ ื‘ื• ื”ื”ื—ืœื˜ื•ืช ื”ืืœื” ืžื•ืคื™ืขื•ืช.
14:03
So half of the customers
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ืื– ื—ืฆื™ ืžื”ืœืงื•ื—ื•ืช
14:05
are going to go from high choice, 56 car colors,
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ื™ืขืœื• ืžื‘ื—ื™ืจื” ืžืจื•ื‘ื”, 56 ืฆื‘ืขื™ ืจื›ื‘,
14:07
to low choice, four gearshifts.
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ืœื‘ื—ื™ืจื” ืžืขื˜ื”, 4 ืชื™ื‘ื•ืช ื”ื™ืœื•ื›ื™ื.
14:10
The other half of the customers
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ื—ืฆื™ ืื—ืจ ืžื”ืœืงื•ื—ื•ืช
14:12
are going to go from low choice, four gearshifts,
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ื™ืจื“ื• ืžื‘ื—ื™ืจื” ืžืขื˜ื”, 4 ืชื™ื‘ื•ืช ื”ื™ืœื•ื›ื™ื,
14:14
to 56 car colors, high choice.
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ืœ 56 ืฆื‘ืขื™ ืจื›ื‘, ื‘ื—ื™ืจื” ืžืจื•ื‘ื”.
14:17
What am I going to look at?
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ืขืœ ืžื” ืื ื™ ืืกืชื›ืœ?
14:19
How engaged you are.
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ืขื“ ื›ืžื” ืืชื ืžืขื•ืจื‘ื™ื.
14:21
If you keep hitting the default button per decision,
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ืื ืืชื ืœื•ื—ืฆื™ื ื›ืœ ื”ื–ืžืŸ ืขืœ ื›ืคืชื•ืจ ื‘ืจื™ืจืช ื”ืžื—ื“ืœ ืœื›ืœ ื”ื—ืœื˜ื”,
14:24
that means you're getting overwhelmed,
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ื–ื” ืื•ืžืจ ืฉืืชื ื”ืžื•ืžื™ื,
14:26
that means I'm losing you.
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ื–ื” ืื•ืžืจ ืฉืื ื™ ืžืื‘ื“ืช ืืชื›ื.
14:28
What you find
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ืžื” ืฉืžื•ืฆืื™ื
14:30
is the people who go from high choice to low choice,
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ื”ื•ื ืฉืžื™ ืฉืขื•ื‘ืจ ืžื‘ื—ื™ืจื” ืžืจื•ื‘ื” ืœื‘ื—ื™ืจื” ืžืขื˜ื”,
14:32
they're hitting that default button over and over and over again.
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ืœื•ื—ืฆื™ื ืขืœ ื‘ืจื™ืจืช ื”ืžื—ื“ืœ ืฉื•ื‘ ื•ืฉื•ื‘ ื•ืฉื•ื‘.
14:35
We're losing them.
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ืื ื—ื ื• ืžืื‘ื“ื™ื ืื•ืชื.
14:37
They go from low choice to high choice,
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ืืœื” ืฉืขื•ื‘ืจื™ื ืžื‘ื—ื™ืจื” ืžืขื˜ื” ืœื‘ื—ื™ืจื” ืžืจื•ื‘ื”,
14:39
they're hanging in there.
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ืžื—ื–ื™ืงื™ื ืžืขืžื“.
14:41
It's the same information. It's the same number of choices.
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ื–ื” ืื•ืชื• ื”ืžื™ื“ืข. ื–ื• ืื•ืชื” ื›ืžื•ืช ื‘ื—ื™ืจื•ืช.
14:44
The only thing that I have done
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ื”ื“ื‘ืจ ื”ื™ื—ื™ื“ ืฉืขืฉื™ืชื™
14:46
is I have varied the order
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ื”ื•ื ืœืฉื ื•ืช ืืช ื”ืกื“ืจ
14:48
in which that information is presented.
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ื‘ื• ืžื•ืฆื’ ื”ืžื™ื“ืข.
14:50
If I start you off easy,
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ืื ืื ื™ ืžืชื—ื™ืœื” ื‘ืงืœื•ืช,
14:52
I learn how to choose.
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ืื ื™ ื™ื›ื•ืœื” ืœืœืžื•ื“ ืื™ืš ืœื‘ื—ื•ืจ.
14:54
Even though choosing gearshift
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ืœืžืจื•ืช ืฉื‘ื—ื™ืจืช ืชื™ื‘ืช ื”ื™ืœื•ื›ื™ื
14:57
doesn't tell me anything about my preferences for interior decor,
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ืœื ืงืฉื•ืจื” ื›ืœืœ ืœื”ืขื“ืคื•ืช ืฉืœื™ ื‘ืขื™ืฆื•ื‘ ืคื ื™ื,
15:00
it still prepares me for how to choose.
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ื–ื” ืขื“ื™ื™ืŸ ืžืœืžื“ ืื•ืชื™ ืื™ืš ืœื‘ื—ื•ืจ.
15:03
It also gets me excited about this big product that I'm putting together,
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ื–ื” ื’ื ืžืœื”ื™ื‘ ืื•ืชื™ ืœื’ื‘ื™ ื”ืžื•ืฆืจ ื”ื’ื“ื•ืœ ื”ื–ื” ืฉืื ื™ ืžืจื›ื™ื‘ื”,
15:06
so I'm more willing to be motivated
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ืื– ื™ืฉ ืœื™ ื™ื•ืชืจ ืžื•ื˜ื™ื‘ืฆื™ื”
15:08
to be engaged.
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ืœื”ื™ื•ืช ืžืขื•ืจื‘ืช ื‘ืชื”ืœื™ืš.
15:10
So let me recap.
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ืื– ืชื ื• ืœื™ ืœืกื›ื.
15:12
I have talked about four techniques
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ื“ื™ื‘ืจืชื™ ืขืœ 4 ื˜ื›ื ื™ืงื•ืช
15:15
for mitigating the problem of choice overload --
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ืœื”ืชืžื•ื“ื“ื•ืช ืขื ื‘ืขื™ื™ืช ืขื•ืžืก ื”ื‘ื—ื™ืจื” -
15:18
cut -- get rid of the extraneous alternatives;
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ืงืฆืฆื• - ืชื™ืคื˜ืจื• ืžืืœื˜ืจื ื˜ื™ื‘ื•ืช ืžื™ื•ืชืจื•ืช.
15:21
concretize -- make it real;
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ืชื”ืคื›ื• ืœืงื•ื ืงืจื˜ื™ - ืžื•ื—ืฉื™ื•ืช.
15:24
categorize -- we can handle more categories, less choices;
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ืงื˜ื’ื•ืจื™ื–ืฆื™ื” - ืื ื—ื ื• ื™ื›ื•ืœื™ื ืœื”ืชืžื•ื“ื“ ืขื ื™ื•ืชืจ ืงื˜ื’ื•ืจื™ื•ืช, ืคื—ื•ืช ื‘ื—ื™ืจื•ืช.
15:28
condition for complexity.
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ื”ืชื ื™ื” ืœืžื•ืจื›ื‘ื•ืช.
15:31
All of these techniques that I'm describing to you today
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ื›ืœ ื”ื˜ื›ื ื™ืงื•ืช ื”ืืœื” ืฉืชื™ืืจืชื™ ื‘ืคื ื™ื›ื
15:34
are designed to help you manage your choices --
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ืžื™ื•ืขื“ื•ืช ืœืกื™ื™ืข ืœื›ื ืœื ื”ืœ ืืช ื‘ื—ื™ืจื•ืชื™ื›ื -
15:37
better for you, you can use them on yourself,
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ื–ื” ื˜ื•ื‘ ืœื‘ื—ื™ืจื•ืช ืฉืœื›ื,
15:40
better for the people that you are serving.
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ื–ื” ื˜ื•ื‘ ืœื‘ื—ื™ืจื•ืช ืฉืœ ื”ืื ืฉื™ื ืฉืืชื ืžืฉืจืชื™ื.
15:42
Because I believe that the key
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ื›ื™ ืื ื™ ืžืืžื™ื ื” ืฉื”ืžืคืชื—
15:44
to getting the most from choice
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ืœืžื™ืงืกื•ื ื‘ื—ื™ืจื”
15:46
is to be choosy about choosing.
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ื”ื•ื ืœื”ื™ื•ืช ื‘ืจืจืŸ ืœื’ื‘ื™ ื‘ืจื™ืจื•ืช.
15:49
And the more we're able to be choosy about choosing
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ื•ื›ื›ืœ ืฉื ื•ื›ืœ ืœื”ื™ื•ืช ื™ื•ืชืจ ื‘ืจืจื ื™ื™ื ืœื’ื‘ื™ ื‘ืจื™ืจื•ืช,
15:51
the better we will be able
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ื›ืš ื ืฆืœื™ื— ื™ื•ืชืจ
15:53
to practice the art of choosing.
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ื‘ืžืœืื›ืช ื”ื‘ื—ื™ืจื”.
15:55
Thank you very much.
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ืชื•ื“ื” ืจื‘ื” ืœื›ื.
15:57
(Applause)
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(ืžื—ื™ืื•ืช ื›ืคื™ื™ื)
ืขืœ ืืชืจ ื–ื”

ืืชืจ ื–ื” ื™ืฆื™ื’ ื‘ืคื ื™ื›ื ืกืจื˜ื•ื ื™ YouTube ื”ืžื•ืขื™ืœื™ื ืœืœื™ืžื•ื“ ืื ื’ืœื™ืช. ืชื•ื›ืœื• ืœืจืื•ืช ืฉื™ืขื•ืจื™ ืื ื’ืœื™ืช ื”ืžื•ืขื‘ืจื™ื ืขืœ ื™ื“ื™ ืžื•ืจื™ื ืžื”ืฉื•ืจื” ื”ืจืืฉื•ื ื” ืžืจื—ื‘ื™ ื”ืขื•ืœื. ืœื—ืฅ ืคืขืžื™ื™ื ืขืœ ื”ื›ืชื•ื‘ื™ื•ืช ื‘ืื ื’ืœื™ืช ื”ืžื•ืฆื’ื•ืช ื‘ื›ืœ ื“ืฃ ื•ื™ื“ืื• ื›ื“ื™ ืœื”ืคืขื™ืœ ืืช ื”ืกืจื˜ื•ืŸ ืžืฉื. ื”ื›ืชื•ื‘ื™ื•ืช ื’ื•ืœืœื•ืช ื‘ืกื ื›ืจื•ืŸ ืขื ื”ืคืขืœืช ื”ื•ื•ื™ื“ืื•. ืื ื™ืฉ ืœืš ื”ืขืจื•ืช ืื• ื‘ืงืฉื•ืช, ืื ื ืฆื•ืจ ืื™ืชื ื• ืงืฉืจ ื‘ืืžืฆืขื•ืช ื˜ื•ืคืก ื™ืฆื™ืจืช ืงืฉืจ ื–ื”.

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