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The more choice, the better? Evidence from experimental auctions in rural Senegal

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  • Jeuland, Marc
  • Ndiaye, Ousmane
  • Usmani, Faraz

Abstract

Economists generally believe that more choice is beneficial, yet bigger choice sets can impose opportunity, error and cognitive costs that lower demand. We study this relationship in the context of rural energy use in low-income settings. We invited approximately 1100 randomly selected Senegalese households to participate in second-price auctions for improved cookstoves, and exogenously varied the number and types of devices being auctioned to identify the causal impact of expanded choice on willingness to pay (WTP). Expanded choice lowered WTP for a more advanced but relatively unfamiliar cookstove by 25%, but had no effect on WTP for a simpler, locally produced device. Households’ ability to compare alternatives side-by-side during multi-device auctions and identify the one best suited to their needs appears to drive these results. Our findings have implications for the design of policies that aim to introduce welfare-improving technologies in remote, rural areas.

Suggested Citation

  • Jeuland, Marc & Ndiaye, Ousmane & Usmani, Faraz, 2021. "The more choice, the better? Evidence from experimental auctions in rural Senegal," Economics Letters, Elsevier, vol. 206(C).
    • Handle: RePEc:eee:ecolet:v:206:y:2021:i:c:s0165176521002469
    DOI: 10.1016/j.econlet.2021.109969
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    References listed on IDEAS

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    Cited by:

    1. Xinye Hu & Ofir Turel & Wanting Chen & Jia Shi & Qinghua He, 2023. "The effect of trait-state anxiety on choice overload: the mediating role of choice difficulty," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 50(2), pages 143-152, June.

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    More about this item

    Keywords

    Choice overload; Willingness to pay; Improved cookstoves; Vickrey auction;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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