Regret Theory and the Tyranny of Choice*

• Autores: Ben Irons, Cameron Hepburn
• Localización: Economic record, ISSN 0013-0249, Vol. 83, Nº. 261, 2007, págs. 191-203
• Idioma: inglés
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• Resumen

  • As economists, we tend to accept the principle that more choice cannot make us worse off. However, recent evidence from laboratory and field experiments suggests that more choice can inhibit decision-making and reduce search in many situations, potentially reducing welfare. This paper provides a formal theoretical foundation for these observations by embedding the regret theory of Loomes and Sugden (1982) in three search models. Beyond a threshold number of options, we find that ‘less is more’: agents who experience regret have lower utility as the number of options is increased.