Are more alternatives better for decision-makers? A note on the role of decision cost

Are more alternatives better for decision-makers? A note on the role of decision cost

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Article ID: iaor2006676
Country: Germany
Volume: 58
Issue: 3
Start Page Number: 283
End Page Number: 304
Publication Date: May 2005
Journal: Theory and Decision
Authors: , ,
Abstract:

While the traditional economic wisdom believes that an individual will become better off by being given a larger opportunity set to choose from, in this paper we question this belief and build a formal theoretical model that introduces decision costs into the rational decision process. We show, under some reasonable conditions, that a larger feasible set may actually lower an individual's level of satisfaction. This provides a solid economic underpinning for the Simon prediction.

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