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Integrating Routine, Variety Seeking and Compensatory Choice in a Utility Maximizing Framework

Wiktor Adamowicz and Joffre Swait

No 98687, Staff Paper Series from University of Alberta, Department of Resource Economics and Environmental Sociology

Abstract: Given the large number of choices that consumers make each day it seems likely that they will generally adopt decision strategies that minimize cognitive effort, particularly with low price products such as most items found in a supermarket. One such strategy may be to simply choose what has been chosen in the past, i.e. to fall into a pattern of routine choices or decisions. In contrast, there may be preferences for variety in markets for low price, highly differentiated goods. We develop a conceptual and empirical model of routine choice, and the factors that result in transitions to two strategies other than routine selection, to wit, utility maximizing choice among available alternatives and a variety seeking strategy. The empirical approach we employ provides a mechanism for the examination of panel data that avoids the state dependence issues present in most applications to these types of data. We apply this framework to the choice of two food products that illustrate the heterogeneity across types of products in decision strategies and routine choice patterns.

Keywords: Consumer/Household Economics; Demand and Price Analysis; Institutional and Behavioral Economics (search for similar items in EconPapers)
Pages: 40
Date: 2010
New Economics Papers: this item is included in nep-agr, nep-dcm and nep-evo
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ualbsp:98687

DOI: 10.22004/ag.econ.98687

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