Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/74159 
Authors: 
Year of Publication: 
2006
Series/Report no.: 
Nota di Lavoro No. 37.2006
Publisher: 
Fondazione Eni Enrico Mattei (FEEM), Milano
Abstract: 
This paper investigates choice between opportunity sets. I argue that individuals may prefer to have fewer options for two reasons: First, smaller choice sets may provide information and reduce the need for the agent to contemplate the alternatives. Second, contemplation costs may be increasing in the size of the choice set, making smaller sets more desirable even when they do not provide any information to the agent. I identify which of these reasons drives individual behavior in a laboratory experiment. I find strong support for both the information and cognitive overload arguments. The effects do not disappear as participants gain experience with the task. Applications of these results include firmsÂ’ choices of product variety, as costs increase with the number of products offered, and the design of government policies, such as the Medicare Drug Discount Card Program, in which older citizens can choose among numerous cards for discounts in prescription drugs.
Subjects: 
Choice
Opportunity Sets
JEL: 
C9
C91
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.