A model of menu-dependent evaluations and comparison-aversion

Amnon Maltz and Shiran Rachmilevitch

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2021, vol. 91, issue C

Abstract: We introduce the comparison based model (CBM) in which a decision maker evaluates goods not only according to their intrinsic values but also by how difficult it is to compare them to other goods. The model naturally explains context effects, such as choice overload, choice under conflict and decision avoidance. It also sheds light on the weakening of the compromise effect in the presence of an outside option. We provide a formal derivation of the model based on two testable restrictions imposed on the decision maker’s willingness to pay for alternatives in different contexts. Under a richness assumption, the impact of comparisons on willingness to pay is independent of the menu size within a large class of preferences.

Keywords: Comparability; Menu-Dependence; Willingness to pay; Choice overload; Choice complexity; Compromise effect (search for similar items in EconPapers)
JEL-codes: C91 D91 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:91:y:2021:i:c:s2214804320306984

DOI: 10.1016/j.socec.2020.101655

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