Choice Overload, Satisficing Behavior, and Price Distribution in a Time Allocation Model

Recent psychological research indicates that consumers that search exhaustively for the best option of a market product—known as maximizers—eventually feel worse than consumers who just look for something good enough—called satisficers. We formulate a time allocation model to explore the relationship between different distributions of prices of the product and the satisficing behavior and the related welfare of the consumer. We show numerically that, as the number of options becomes large, the maximizing behavior produces less and less welfare and eventually leads to choice paralysis—these are effects of choice overload—whereas satisficing conducts entail higher levels of satisfaction and do not end up in paralysis. For different price distributions, we provide consistent evidence that maximizers are better off for a low number of options, whereas satisficers are better off for a sufficiently large number of options. We also show how the optimal satisficing behavior is affected when the underlying price distribution varies. We provide evidence that the mean and the dispersion of a symmetric distribution of prices—but not the shape of the distribution—condition the satisficing behavior of consumers. We also show that this need not be the case for asymmetric distributions

Harmful Freedom of Choice: Lessons from the Cellphone Market

This article focuses on the relationship between provider and customer, specifically on the complexity of available contracts in the cellphone market and the ways this complexity might be harmful to consumers. This article aims to elucidate the issues, fleshing them out both as a general phenomenon and as a specific implementation in the cellphone context. The aim is not to provide ultimate solutions, but to show the directions these solutions might take and the difficulties involved

On the Essential Multidimensionality of an Economic Problem: Towards Tradeoffs-Free Economics

The foundation of welfare economics is the assumption of Pareto-efficiency and its concept of tradeoffs. Also the production possibility frontier, efficiency frontier, nondominated set, etc., belong to the plethora of tools derived from the Pareto principle. The assumption of tradeoffs does not address the issue of system design or redesign in order to reduce or eliminate tradeoffs as a sure characteristic of suboptimal, inefficient system configuration. In this paper we establish that tradeoffs are not attributes of objectives, criteria or dimensions, as it is habitually assumed, but are the properties of the very sets of possibilities, alternatives or options they purport to value and measure. We use De novo programming, through which the so called feasible set of opportunities can be redefined towards optimal, tradeoffs-free configuration. The implications of tradeoff-free economics are too vast to foresee and elaborate in a single paper; they do touch the very foundations of economic thought. So me numerical examples are given in order to illustrate system-design calculations in linear systems.Tradeoffs, multiple criteria, decision making, tradeoffs-free, optimization, De novo programming, Pareto-efficiency, added value

Does graph disclosure bias reduce the cost of equity?

Research on disclosure and capital markets focuses primarily on the amount of information provided but pays little attention to the presentation format of this information. This paper examines the impact of graph utilization and graph quality (distortion) on the cost of equity capital, controlling for the interaction between disclosure and graph distortion. Despite the advantages of graphs in communicating information, our results show that graph utilization does not have a significant impact on users’ decisions. However we observe a significant (negative) association between graph distortion and the exante cost of equity. This effect though, disappears if we use realised returns as a measure of expost cost of equity. Moreover, we find that disclosure and graph distortion interact so that the impact of disclosure on the cost of capital depends on graph integrity. For low level of overall disclosure, graph distortion reduces the exante cost of equity. However for high level of disclosure graph distortion increases the exante cost of equity

The management of academic workloads: full report on findings

The pressures on UK higher education (from explicit competition and growth in student numbers, to severe regulatory demands) are greater than ever, and have resulted in a steady increase in measures taken by universities to actively manage their finances and overall quality. These pressures are also likely to have impacted on staff and, indeed, recent large surveys in the sector have indicated that almost half of respondents find their workloads unmanageable. Against this background it would seem logical that the emphasis on institutional interventions to improve finance and quality, should be matched by similar attention given to the allocation of workloads to staff, and a focus on how best to utilise people’s time - the single biggest resource available within universities. Thus the aim of this piece of research was to focus on the processes and practices surrounding the allocation of staff workloads within higher education. Ten diverse organisations were selected for study: six universities in the UK, two overseas universities and two non higher education (but knowledge-intensive) organisations. In each, a crosssection of staff was selected, and in-depth interviews carried out. A total of 59 such interviews were carried out across the ten organisations. By identifying typical practices, as well as interesting alternatives, views on the various strengths and weaknesses of each of their workload allocation approaches was collated; and associated factors requiring attention identified. Through an extensive process of analysis, approaches which promoted more equitable loads for individuals, and which might provide synergies for institutions were also investigated

Optimal menu when agents make mistakes

This paper studies how an optimal menu chosen by a social planner depends on whether agents receive imperfect signals about their true tastes (imperfect self-knowledge) or the properties of available alternatives (imperfect information). Under imperfect self-knowledge, it is not optimal to offer fewer alternatives than the number of different tastes present in the population, unless noise is infinite (agents have no clue about their true preferences). As noise increases, the social planner offers menu items that are closer together (more similar). However, under imperfect information, as noise increases, it could be optimal to construct a menu with more distinct alternatives, restrict the number of options, or, for some finite noise, offer a single item