Abstract
While the traditional economic wisdom believes that an individual will become better off by being given a larger opportunity set to choose from, in this paper we question this belief and build a formal theoretical model that introduces decision costs into the rational decision process. We show, under some reasonable conditions, that a larger feasible set may actually lower an individual’s level of satisfaction. This provides a solid economic underpinning for the Simon prediction.
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Lu, HC., Chen, M. & Chang, JJ. Are More Alternatives Better for Decision-Makers? A Note on the Role of Decision Cost. Theor Decis 58, 283–304 (2005). https://doi.org/10.1007/s11238-005-5063-1
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DOI: https://doi.org/10.1007/s11238-005-5063-1