A Better Test of Choice Overload

Mark Dean, Dilip Ravindran and Jörg Stoye

Papers from arXiv.org

Abstract: Choice overload - by which larger choice sets are detrimental to a chooser's wellbeing - is potentially of great importance to the design of economic policy. Yet the current evidence on its prevalence is inconclusive. We argue that existing tests are likely to be underpowered and hence that choice overload may occur more often than the literature suggests. We propose more powerful tests based on richer data and characterization theorems for the Random Utility Model. These new approaches come with significant econometric challenges, which we show how to address. We apply our tests to new experimental data and find strong evidence of choice overload that would likely be missed using current approaches.

Date: 2022-12, Revised 2024-07
New Economics Papers: this item is included in nep-dcm and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2212.03931

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