Abstract
We study the behavior of an agent who dislikes large choice sets because of the 'cost of thinking' involved in choosing from them. Focusing on preferences over lotteries of menus, we introduce the notion of Thinking Aversion. We characterize preferences as the difference between an affine evaluation of the content of the menu and a function that assigns to each menu a thinking cost. We provide conditions for which this cost can be seen as the cost that the agent has to sustain to figure out her preferences in order to make a choice.
Original language | English (US) |
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Pages (from-to) | 903-934 |
Number of pages | 32 |
Journal | Journal of Economic Theory |
Volume | 148 |
Issue number | 3 |
DOIs | |
State | Published - May 2013 |
Externally published | Yes |
All Science Journal Classification (ASJC) codes
- Economics and Econometrics
Keywords
- Bounded rationality
- Choice overload
- Contemplation cost
- Cost of thinking
- Preference for flexibility
- Preference over menus