Variety aversion and information overload: An experimental approach

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Papers ; No. 2011-01

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Criteria for Decision-Making under Risk and Uncertainty ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
• Subject: variety aversion ; information overload ; bounded rationality ; decision making ; laboratory experiment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kaiser, Karen
• Event: Veröffentlichung
• (who): Banco de México
• (where): Ciudad de México
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/83754
• Last update: 10.03.2025, 11:43 AM CET