Welcome to the new version of CaltechAUTHORS. Login is currently restricted to library staff. If you notice any issues, please email coda@library.caltech.edu
Published May 2013 | public
Journal Article

The price of flexibility: Towards a theory of Thinking Aversion

Abstract

We 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.

Additional Information

© 2013 Elsevier Inc. Received 22 November 2011; final version received 2 October 2012; accepted 3 October 2012. Available online 8 January 2013. I would like to thank the associate editor and three anonymous referees, Ozgur Evren, Paolo Ghirardato, Alessandro Lizzeri, Massimo Marinacci, Leandro Nascimento, David Pearce, Debraj Ray, Gil Riella, Todd Sarver, Anja Sautmann, Ennio Stacchetti, the participants at seminars at NYU, Society for Economic Design 2008, RUD 2009, Rice, UBC, Brown, Cornell, Caltech, Collegio Carlo Alberto, Bocconi, Luiss, Johns Hopkins, UCSD, and especially Efe Ok for useful comments and suggestions.

Additional details

Created:
August 22, 2023
Modified:
October 24, 2023