Keeping Doors Open: The Effect of Unavailability on Incentives to Keep Options Viable

Jiwoong Shin () and Dan Ariely ()
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Jiwoong Shin: Massachusetts Institute of Technology, 38 Memorial Drive, Cambridge, Massachusetts 02142
Dan Ariely: Massachusetts Institute of Technology, 38 Memorial Drive, Cambridge, Massachusetts 02142

Management Science, 2004, vol. 50, issue 5, 575-586

Abstract: Many of the options available to decision makers, such as college majors and romantic partners, can become unavailable if sufficient effort is not invested in them (taking classes, sending flowers). The question asked in this work is whether a threat of disappearance changes the way people value such options. In four experiments using "door games," we demonstrate that options that threaten to disappear cause decision makers to invest more effort and money in keeping these options open, even when the options themselves seem to be of little interest. This general tendency is shown to be resilient to information about the outcomes, to increased experience, and to the saliency of the cost. The last experiment provides initial evidence that the mechanism underlying the tendency to keep doors open is a type of aversion to loss rather than a desire for flexibility.

Keywords: options; aversion to loss; search (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (27)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:50:y:2004:i:5:p:575-586

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