Preference for Variety
AbstractWe consider a decision maker who enjoys choosing from a varied set of alternatives. Building on behavioral evidence, we propose testable axioms which characterize preference for variety and provide a representation theorem. We go on to illustrate the potential effects of preference for variety in a model of retailing. Consumer welfare may be decreasing in the competitiveness of the retailing sector as competition eliminates the scope for retailers to offer variety. Mainstream consumers with a preference for variety and consumers with eccentric tastes enjoy a symbiotic relationship. Competition over mainstream consumers makes retailers offer more exotic goods, while eccentric consumers subsidize their carrying costs.
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Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Theoretical Economics.
Volume (Year): 12 (2012)
Issue (Month): 1 (January)
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Web page: http://www.degruyter.com
Other versions of this item:
- D0 - Microeconomics - - General
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
- D4 - Microeconomics - - Market Structure and Pricing
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