The Relevance of Irrelevant Information

62 Pages Posted: 8 Mar 2018 Last revised: 7 Jan 2020

See all articles by Ian Chadd

Ian Chadd

University of Maryland - Department of Economics

Emel Filiz-Ozbay

University of Maryland - College Park

Erkut Ozbay

University of Maryland - Department of Economics

Date Written: July 9, 2018

Abstract

This paper experimentally investigates the effect of introducing unavailable alternatives and irrelevant information regarding the alternatives on the optimality of decisions in choice problems. We find that interaction between the unavailable alternatives and irrelevant information regarding the alternatives generates suboptimal decisions. Irrelevant information in any dimension increases the time costs of decisions. We also identify a pure “preference for simplicity” beyond the desire to make optimal decisions or minimize time spent on a decision problem. Our results imply that the presentation set, distinct from the alternative set, needs to be a part of decision making models.

Keywords: Presentation set, bounded rationality, simplicity, costly ignorance

JEL Classification: D03, D83, D91

Suggested Citation

Chadd, Ian and Filiz-Ozbay, Emel and Ozbay, Erkut, The Relevance of Irrelevant Information (July 9, 2018). Available at SSRN: https://ssrn.com/abstract=3132014 or http://dx.doi.org/10.2139/ssrn.3132014

Ian Chadd

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

Emel Filiz-Ozbay

University of Maryland - College Park ( email )

College Park, MD 20742
United States

Erkut Ozbay (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

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