Regret Theory and the Tyranny of Choice

13 Pages Posted: 10 Jun 2007

See all articles by Ben Irons

Ben Irons

University of Oxford

Cameron Hepburn

University of Oxford

Abstract

As economists, we tend to accept the principle that more choice cannot make us worse off. However, recent evidence from laboratory and field experiments suggests that more choice can inhibit decision-making and reduce search in many situations, potentially reducing welfare. This paper provides a formal theoretical foundation for these observations by embedding the regret theory of Loomes and Sugden (1982) in three search models. Beyond a threshold number of options, we find that 'less is more': agents who experience regret have lower utility as the number of options is increased.

Suggested Citation

Irons, Ben and Hepburn, Cameron, Regret Theory and the Tyranny of Choice. Economic Record, Vol. 83, No. 261, pp. 191-203, June 2007. Available at SSRN: https://ssrn.com/abstract=991990 or http://dx.doi.org/10.1111/j.1475-4932.2007.00393.x

Ben Irons

University of Oxford

Oxford
United Kingdom

Cameron Hepburn (Contact Author)

University of Oxford ( email )

Oxford
United Kingdom

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