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Evaluating opportunities when more is less

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  • Yukinori Iwata

    (Nishogakusha University)

Abstract

There exists psychological evidence that consumers do not consider all available items in the market, which can lead to the “more-is-less” effect, a phenomenon where having more options causes a welfare reduction (Llears et al. in J Econ Theory 170:70–85, 2017). Under this more-is-less effect, we face a dilemma that adding new opportunities may both improve and worsen individual well-being. This study proposes a hypothesis that “more is always better,” which implies that adding new opportunities cannot worsen individual well-being, is a bias to which moral heuristics leads. A satisfactory resolution of this dilemma is act-consequentialism over menus, which is an ex-post and third-party evaluation of opportunity sets. We provide an axiomatic foundation for act-consequentialism over menus and apply it to policymakers’ menu-providing policies.

Suggested Citation

  • Yukinori Iwata, 2023. "Evaluating opportunities when more is less," Theory and Decision, Springer, vol. 95(1), pages 109-130, July.
    • Handle: RePEc:kap:theord:v:95:y:2023:i:1:d:10.1007_s11238-022-09914-8
    DOI: 10.1007/s11238-022-09914-8
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    References listed on IDEAS

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