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Permanent link (DOI): https://doi.org/10.7939/R3GX75

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Choice Environment, Market Complexity and Consumer Behavior: A Theoretical and Empirical Approach for Incorporating Decision Complexity into Models of Consumer Choice Open Access

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Author or creator
Swait, Joffre
Adamowicz, Wiktor
Additional contributors
Subject/Keyword
choice context
choice modeling
random utility
Type of item
Report
Language
English
Place
Time
Description
Most empirical models of consumer choice assume that the decision-maker assesses all alternatives and information in a perfect information processing sense. The complexity of the choice environment, the ability of the individual to make complex decisions and the effect of choice context on the decision strategy, are generally not considered in statistical model development. One of the reasons for this omission is that theoretical literature on choice complexity and imperfect ability to choose has not been translated into empirical methods that permit such considerations in econometric analysis. In this paper we outline a theoretical model that considers task complexity, effort applied by the consumer, ability to choose, and choice. We then construct a measure of task complexity and incorporate this in a random utility model. We employ this model in the analysis of a number of data series. Our findings suggest that task complexity does affect inferences about choice model parameters and that context effects, like complexity, have a systematic effect on the parameters of econometric models of choice. Not accounting for complexity or context effects will result in significant bias in the estimated preference parameters.
Date created
1999
DOI
doi:10.7939/R3GX75
License information
Creative Commons Attribution-Non-Commercial-No Derivatives 3.0 Unported
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