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The price of flexibility: Towards a theory of Thinking Aversion

  • Ortoleva, Pietro

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.

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File URL: http://www.sciencedirect.com/science/article/pii/S002205311300032X
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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 148 (2013)
Issue (Month): 3 ()
Pages: 903-934

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Handle: RePEc:eee:jetheo:v:148:y:2013:i:3:p:903-934
DOI: 10.1016/j.jet.2012.10.009
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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