The Price of Flexibility: Towards a Theory of Thinking Aversion

TitleThe Price of Flexibility: Towards a Theory of Thinking Aversion
Publication TypeJournal Article
Year of Publication2013
AuthorsOrtoleva P
JournalJournal of Economic Theory
Volume148
Issue3
Pagination - 934
Date PublishedMay 2013
ISBN Number0022-0531, 0022-0531
KeywordsCriteria for Decision-Making under Risk and Uncertainty (D81), Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making (D91)
AbstractWe study the behavior of an agent who dislikes large choice sets because of the 'cost of thinking' involved in choosing from them. Focusing on preferences over lotteries of menus, we introduce the notion of thinking aversion. We characterize preferences as the difference between an affine evaluation of the content of the menu and a function that assigns to each menu a thinking cost. We provide conditions for which this cost can be seen as the cost that the agent has to sustain to figure out her preferences in order to make a choice.
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