Less Choice is Better, Sometimes
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Franklin B Norwood
Psychological experiments have revealed that more choice does not always make one better off. For example, consumers are sometimes more likely to purchase a product from a small variety than a large variety. Some have suggested that this excessive-choice effect may have implications for how well markets serve society. This paper constructs an economic model where the excessive-choice effect results from search costs. The model shows that it is possible for markets to produce too much variety, but there are also incentives inducing markets to provide an optimal variety. Advertising, retailer market power, and slotting fees are not just signs of imperfect competition, but mechanisms of ensuring consumers are presented with an ideal choice set.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
Articles in the same Issue
- Article
- Strategic Labeling and Trade of GMOs
- Ensuring a Safe Food Supply: The Importance of Heterogeneity
- Less Choice is Better, Sometimes
- Choices of Marketing Outlets by Organic Producers: Accounting for Selectivity Effects
- Effects of Sales on Brand Loyalty
- Imperfect Competition and Strategic Trade Theory: Evidence for International Food and Agricultural Markets
- Market Power and European Competition in the Swedish Food Industry
- Market Segmentation Analysis of Preferences for GM Derived Animal Foods in the UK
- Proving Anti-Competitive Conduct in the U.S. Courtroom: Economic Issues with the Courts' Opinions in Pickett v. Tyson Fresh Meats, Inc.
Articles in the same Issue
- Article
- Strategic Labeling and Trade of GMOs
- Ensuring a Safe Food Supply: The Importance of Heterogeneity
- Less Choice is Better, Sometimes
- Choices of Marketing Outlets by Organic Producers: Accounting for Selectivity Effects
- Effects of Sales on Brand Loyalty
- Imperfect Competition and Strategic Trade Theory: Evidence for International Food and Agricultural Markets
- Market Power and European Competition in the Swedish Food Industry
- Market Segmentation Analysis of Preferences for GM Derived Animal Foods in the UK
- Proving Anti-Competitive Conduct in the U.S. Courtroom: Economic Issues with the Courts' Opinions in Pickett v. Tyson Fresh Meats, Inc.
