Ortoleva, Pietro (2008): The Price of Flexibility: Towards a Theory of Thinking Aversion.

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Abstract
The goal of this paper is to model an agent who dislikes large choice sets because of the "cost of thinking" involved in choosing from them. We take as a primitive a preference relation over lotteries of menus and impose novel axioms that allow us to separately identify the genuine preference over the content of menus, and the cost of choosing from them. Using this, we formally define the notion of thinking aversion, much in line with the definitions of risk or ambiguity aversion. We represent such preference as the difference between a monotone and affine evaluation of the content of the set and an anticipated thinking cost function that assigns to each set a thinking cost. We further extend this characterization to the case of monotonicity of the genuine rank and introduce a measure of comparative thinking aversion. Finally, we propose behavioral axioms that guarantee that the cost of thinking can be represented as the sum of the cost to find the optimal choice in a set and the cost to find out which is the optimal choice.
Item Type:  MPRA Paper 

Original Title:  The Price of Flexibility: Towards a Theory of Thinking Aversion 
Language:  English 
Keywords:  Cost of Thinking, Contemplation Cost, Bounded Rationality, Preference Over Menus, Preference for Flexibility, Choice overload 
Subjects:  D  Microeconomics > D8  Information, Knowledge, and Uncertainty > D81  Criteria for DecisionMaking under Risk and Uncertainty D  Microeconomics > D8  Information, Knowledge, and Uncertainty > D84  Expectations; Speculations D  Microeconomics > D8  Information, Knowledge, and Uncertainty > D83  Search; Learning; Information and Knowledge; Communication; Belief 
Item ID:  12242 
Depositing User:  Pietro Ortoleva 
Date Deposited:  17. Dec 2008 18:58 
Last Modified:  19. Feb 2013 10:06 
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URI:  http://mpra.ub.unimuenchen.de/id/eprint/12242 