Opportunity Cost Neglect Attenuates the Effect of Choices on Preferences

Abstract

The idea that choices alter preferences has been widely studied in psychology, yet prior research has primarily focused on choices for which all alternatives were salient at the time of choice. Opportunity costs capture the value of the best forgone alternative and should be considered as part of any decision process, yet people often neglect them. How does the salience of opportunity costs at the time of choice influence subsequent evaluations of chosen and forgone options? Three experiments show that when opportunity costs are explicit at the time of choice, the post-choice spread between evaluations of focal options and opportunity costs is larger than when opportunity costs remain implicit.

Keywords: Opportunity costs, choices, preferences