The less-is-better effect was first proposed by behavioral scientist Christopher Hsee in a 1998 study. He noted in the experiment that a person giving a $45 scarf as a gift was perceived to be more generous than someone giving a $55 coat. The less-is-better effect describes the consumer tendency to choose the worse of two options – provided that each option is presented separately.

Understanding the less-is-better effect

The less-is-better effect was first proposed by behavioral scientist Christopher Hsee in a 1998 study.

In the study, Hsee noted that:

• A person giving a $45 scarf as a gift was perceived to be more generous than someone giving a $55 coat.
• Consumers were willing to pay more for a 7-ounce scoop of ice cream that was overfilled than they were an 8-ounce scoop that was underfilled.
• A dinnerware set with 24 unbroken pieces was seen to be more favorable than a set with 31 unbroken pieces plus a few broken ones.

Results of the study indicated that the less-is-better effect only occurred when each option from the above examples was presented separately. When participants saw the two options together, the effect no longer applied.

Hsee noted that the less-is-better effect is explained by the evaluability hypothesis. In other words, a person who evaluates objects separately bases their evaluation on attributes that are easy to evaluate – and not on important attributes.

Implications for consumers and businesses

The most obvious implication for consumers is the higher likelihood that they will overpay for relatively low-quality items. 

Conversely, they may devalue items that are more objectively valuable simply because of the context in which the products are presented. Assuming that the goal was to eat more ice cream, the larger ice cream scoop was objectively a better option. But when the larger scoop was served in a cup that it did not fill, the smaller scoop (filling a smaller cup) represented better value for money to consumers. 

Marketing teams can use a lack of context to market product categories that only contain a single product. Usually, a consumer will evaluate the price or attributes of a product relative to the other products in the same range. Without this frame of reference, the business can charge a higher price and increase profit margins. 

Avoiding the less-is-better effect

The less-is-better effect is a heuristic – or mental shortcut – so in avoiding it a consumer should spend more time thinking about their decisions.

This can be achieved by: 

• Digging deeper to determine the objective component of decision making as opposed to the subjective.
• Not passing judgment (good or bad) on a product in isolation. Consumers should get into the habit of being comparison shoppers to make more balanced decisions.
• Considering context. Wherever possible, do not dismiss products because of their perceived inferiority. In other words, does the larger ice cream scoop contain less ice cream even though it does not fill the cup?

Key takeaways

• The less-is-better effect describes the irrational consumer preference for a lesser or smaller alternative when two options are presented separately.
• The less-is-better effect causes consumers to devalue products that are objectively more valuable by failing to consider broader contexts.
• The less-is-better effect can be avoided by slowing down the thinking process. Consumers should always strive for objectivity and resist the urge to pass positive or negative judgment on products in isolation.

Read Next: Mental Models, Biases, Bounded Rationality, Mandela Effect, Dunning-Kruger Effect, Lindy Effect, Crowding Out Effect, Bandwagon Effect.

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