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Variety Aversion and Information Overload: An Experimental Approach

  • Karen Kaiser

This paper analyzes the effect of information overload on preference or aversion for variety. According to the model, a rational decision maker who suffers from information overload, faces a two-stage decision process, and is choosing from a set of unknown goods will find it optimal at some point to become variety averse. To test this hypothesis, an experiment is conducted, and its results, that subjects suffering from information overload use variety aversion as a strategy to deal with their cognitive limitations, are consistent with the model. Moreover, results suggest that subjects are, on the average, choosing the optimal number of goods. As the price of the goods increases, subjects become more variety averse. In addition, as they become more experienced, they prefer larger sets of goods.

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Paper provided by Banco de México in its series Working Papers with number 2011-01.

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Date of creation: May 2011
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Handle: RePEc:bdm:wpaper:2011-01
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  1. Jacoby, Jacob, 1984. " Perspectives on Information Overload," Journal of Consumer Research, University of Chicago Press, vol. 10(4), pages 432-35, March.
  2. Xavier Gabaix & David Laibson & Guillermo Moloche & Stephen Weinberg, 2005. "Information Acquisition: Experimental Analysis of a Boundedly Rational Model," Levine's Bibliography 666156000000000480, UCLA Department of Economics.
  3. Jacoby, Jacob & Speller, Donald E & Berning, Carol A Kohn, 1974. " Brand Choice Behavior as a Function of Information Load: Replication and Extension," Journal of Consumer Research, University of Chicago Press, vol. 1(1), pages 33-42, June.
  4. Miguel A. Costa-Gomes & Vincent P. Crawford, 2006. "Cognition and Behavior in Two-Person Guessing Games: An Experimental Study," Levine's Bibliography 321307000000000336, UCLA Department of Economics.
  5. Todd Sarver, 2008. "Anticipating Regret: Why Fewer Options May Be Better," Econometrica, Econometric Society, vol. 76(2), pages 263-305, 03.
  6. Klaus Wertenbroch, 1998. "Consumption Self-Control by Rationing Purchase Quantities of Virtue and Vice," Marketing Science, INFORMS, vol. 17(4), pages 317-337.
  7. Xavier Gabaix & David Laibson & Guillermo Moloche & Stephen Weinberg, 2006. "Costly Information Acquisition: Experimental Analysis of a Boundedly Rational Model," American Economic Review, American Economic Association, vol. 96(4), pages 1043-1068, September.
  8. Scammon, Debra L, 1977. " "Information Load" and Consumers," Journal of Consumer Research, University of Chicago Press, vol. 4(3), pages 148-55, December.
  9. Cecilia Chaing & Lindsay McSweeney, 2010. "A Behavioral Model of Rational Choice," CPI Journal, Competition Policy International, vol. 6.
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