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Buridanic competition

Bachi, B; Spiegler, R; (2017) Buridanic competition. Games and Economic Behavior , 107 pp. 298-315. 10.1016/j.geb.2017.10.024. Green open access

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We analyze a model of two-attribute competition for a decision maker who follows a non-compensatory choice procedure that only responds to ordinal rankings along the two dimensions. The decision maker has an outside option that functions as a default alternative. In the absence of a dominant alternative, the decision maker may stick to the default even if it is dominated – capturing the phenomenon of choice procrastination in the presence of difficult choices. We show that the prevalence of difficult-choice situations in equilibrium is related to the magnitude of the choice procrastination effect. In general, features of the choice procedure that are typically viewed as biases tend to “protect” the decision maker, in the sense that they encourage competitors to offer higher-value alternatives in equilibrium. We discuss the potential implications of this analysis for recent discussions of “default architecture”.

Type: Article
Title: Buridanic competition
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.geb.2017.10.024
Publisher version: https://doi.org/10.1016/j.geb.2017.10.024
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Social Sciences, Economics, Business & Economics, Trade-off avoidance, Competition, Choice complexity, Default bias, Behavioral industrial organization, Multi-attribute products, STATUS-QUO BIAS, CHOICE, SALIENCE, MARKETS, MODEL
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10055477
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