Regret theory and the tyranny of choice
with Irons, Economic Record, 83:261, 191-203, 2007.
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.