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Variety Aversion and Information Overload: An Experimental Approach

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  • Kaiser Karen

Abstract

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.

Suggested Citation

  • Kaiser Karen, 2011. "Variety Aversion and Information Overload: An Experimental Approach," Working Papers 2011-01, Banco de México.
    • Handle: RePEc:bdm:wpaper:2011-01
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    References listed on IDEAS

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    Cited by:

    1. Komal Nagar & Payal Gandotra, 2016. "Exploring Choice Overload, Internet Shopping Anxiety, Variety Seeking and Online Shopping Adoption Relationship: Evidence from Online Fashion Stores," Global Business Review, International Management Institute, vol. 17(4), pages 851-869, August.
    2. Kazuhiko Nishimura, 2013. "Quality Adjustment in Non-spanning Markets with Variety Aversion," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 2(1), pages 1-18, December.
    3. Anna Conte & M. Levati, 2014. "Use of data on planned contributions and stated beliefs in the measurement of social preferences," Theory and Decision, Springer, vol. 76(2), pages 201-223, February.
    4. Ortoleva, Pietro, 2013. "The price of flexibility: Towards a theory of Thinking Aversion," Journal of Economic Theory, Elsevier, vol. 148(3), pages 903-934.
    5. Kaiser Karen & Schwabe Rainer, 2012. "Preference for Variety," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 12(1), pages 1-32, January.

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    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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