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When More Alternatives Lead to Less Choice

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Author Info

  • Dmitri Kuksov

    ()
    (Washington University in St. Louis, St. Louis, Missouri 63130)

  • J. Miguel Villas-Boas

    ()
    (Haas School of Business, University of California, Berkeley, Berkeley, California 94720)

Abstract

This paper shows that when the alternatives offered to consumers span the preference space (as it would be chosen by a firm), search or evaluation costs may lead consumers not to search and not to choose if too many or too few alternatives are offered. If too many alternatives are offered, then the consumer may have to engage in many searches or evaluations to find a satisfactory fit. This may be too costly and result in the consumer avoiding making a choice altogether. If too few alternatives are offered, then the consumer may not search or choose, fearing that an acceptable choice is unlikely. These two forces result in the existence of a finite optimal number of alternatives that maximizes the probability of choice.

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File URL: http://dx.doi.org/10.1287/mksc.1090.0535
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Bibliographic Info

Article provided by INFORMS in its journal Marketing Science.

Volume (Year): 29 (2010)
Issue (Month): 3 (05-06)
Pages: 507-524

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Handle: RePEc:inm:ormksc:v:29:y:2010:i:3:p:507-524

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Related research

Keywords: product line; choice; search; information overload;

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Cited by:
  1. Richards, Timothy J. & Hamilton, Stephen F., 2011. "Variety and Cost Pass-Through among Supermarket Retailers," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114815, European Association of Agricultural Economists.
  2. Jason T. Abaluck & Jonathan Gruber, 2009. "Choice Inconsistencies Among the Elderly: Evidence from Plan Choice in the Medicare Part D Program," NBER Working Papers 14759, National Bureau of Economic Research, Inc.
  3. Caplin, Andrew & Dean, Mark, 2011. "Search, choice, and revealed preference," Theoretical Economics, Econometric Society, vol. 6(1), January.
  4. Fudenberg, Drew, 2006. "Advancing Beyond "Advances in Behavioral Economics"," Scholarly Articles 3208222, Harvard University Department of Economics.
  5. Chris M. Wilson & Luke Garrod & Alistair Munro, 2012. "Default Effects, Transaction Costs, and Imperfect Information," GRIPS Discussion Papers 12-16, National Graduate Institute for Policy Studies.
  6. Amit, Adi & Sagiv, Lilach, 2013. "The role of epistemic motivation in individuals’ response to decision complexity," Organizational Behavior and Human Decision Processes, Elsevier, vol. 121(1), pages 104-117.
  7. Simon P. Anderson & André De Palma, 2012. "Shouting to be Heard in Advertising," Working Papers hal-00742240, HAL.
  8. Elena Reutskaja & Rosemarie Nagel & Colin F. Camerer & Antonio Rangel, 2011. "Search Dynamics in Consumer Choice under Time Pressure: An Eye-Tracking Study," American Economic Review, American Economic Association, vol. 101(2), pages 900-926, April.

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