|Kalaycı, Kenan; Serra-Garcia, Marta (May 2012): Complexity and Biases. Discussion Papers in Economics 2012-16|
We examine experimentally how complexity affects decision-making, when individuals choose among different products with varying benefits and costs. We find that complexity in costs leads to choosing a high-benefit product, with high costs and overall lower payoffs. In contrast, when complexity is in the benefits of the product, we cannot reject the hypothesis of random mistakes. We also examine the role of heterogeneous complexity. We find that individuals still (mistakenly) choose the high-benefit but costly product, even if cheaper and simple products are available. Our results suggest that salience is a main driver of choices under different forms of complexity.
|Item Type:||Paper (Discussion Paper)|
|Keywords:||Complexity, Credit, Mistakes, Narrow Bracketing|
Economics > Munich Discussion Papers in Economics
|Subjects:||300 Social sciences > 300 Social sciences, sociology and anthropology|
300 Social sciences > 330 Economics
|JEL Classification:||C91, D03, D14, G02|
|Deposited On:||29. May 2012 11:15|
|Last Modified:||30. Aug 2016 12:27|
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