The Department of Finance of the University of Luxembourg is pleased to invite you to this seminar with Dr Joerg Weber, Senior Lecturer in Economics at Exeter University Business School
AbstractWe study choice overload in a novel experimental paradigm, designed to mimic aspects of consumer behaviour. Choice overload is the notion that consumers may be better off with less choice. Although a substantial literature exists, the claim that choice overload is a significant problem for consumers remains contentious, because the success of consumer finance and retail markets can to a large extend be attributed to the enormous amount of options they offer. Replication studies and meta-analyses also cast doubt on the findings and generalizability of the existing literature.
Our environment allows us to manipulate candidate determinants of choice overload systematically to assess their consequences for successful choice. In multiple rounds, subjects face a large array of multi-attribute objects of which they will ultimately select one. Attributes are initially hidden, and subjects have a fixed amount of time to investigate the objects and make their selection. We manipulate time pressure, the nature of the objects and whether or not subjects choose the size of their choice sets.
We assess subjects’ performance by how well the ultimately chosen object matches their preferences. Our main results show that performance is negatively and significantly related to the size of the choice set, hence providing strong support for choice overload. In contrast with the prediction of standard economic theory, where an expanding choice set would always (weakly) increase utility, we demonstrate that subjects perform significantly worse as the choice set size increases. In treatments where we impose big choice sets, some subjects could perform significantly better by focusing on just a few options; in environments where subjects choose the size of the choice set, some subjects would do better by picking smaller ones. Objective performance correlates positively with subjective self-reports of choice satisfaction. We investigate determinants of choice overload and find that the way how subjects search for information is a significant predictor of overloadedness.
Kindly note that this event will be held under the rules currently in force: CovidCheck
- Be fully vaccinated and bring your COVID-Check QR code OR
- Have recovered from COVID and bring your COVID-Check QR code OR
Have a negative PCR test done maximum 72h before the event