Abstract

This paper revisits the classic Pandora’s box problem, focusing on a decision-maker (DM) who seeks to minimize her maximal ex-post regret. The DM must decide how many options to explore before choosing one or taking the outside option. We characterize the regret-minimizing search rule and show that the likelihood of opting out often increases as more options become available for exploration. Our model thus predicts `choice overload,’ the phenomenon by which a default alternative is more likely to be chosen in larger choice sets.

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If you have any queries regarding the seminar, please contact the seminar organizers Katrine V. Løken, Heidi C. Thysen, Eirik G. Kristiansen or Camilla Nesfossen Hopsdal.