This study measures the perceived costs, perceived benefits, choice outcome satisfaction, and choice process satisfaction from consumers making hypothetical choices amongst prescription drug plans. I juxtapose the number of options the consumer is choosing between and his/her perceived variety of the choice set to understand which contributes more to explaining these outcomes. I find that once perceived variety is included in the model, the number of options (i) has no effect on perceived benefits and choice outcome satisfaction, (ii) increases perceived costs, and (iii) decreases choice process satisfaction. Furthermore, the concave relationship that has been shown to occur when the number of options increases is a function of the subjective perception of variety. Overall, these results contribute to our understanding of how assortment structure and the number of options affect choice outcome and process satisfaction. Additionally, this study provides some evidence that can inform U.S. national heath insurance policy and the current debate on choice in health care in the United States and other countries.

Whereas much literature exists on “choice overload”, less is known about effects of numbers of alternatives in donation decisions. We hypothesize that donations increase with the number of recipients, albeit at a decreasing rate, and reflect donors’ knowledge of the recipients. Donations involve different concepts of fairness—equity and equality—and these can interact with numbers of alternatives. In two experiments, respondents indicated how they would donate lottery winnings of 50 Euros. Results showed, first, that more was donated to non-governmental organizations and campaigns that respondents knew better. Second, total donations increased with the number of recipients albeit at a decreasing rate. Third, when limited to giving to only one of multiple alternatives, donors gave less than when this restriction did not apply. Fourth, variability of donations can both increase and decrease with the number of potential recipients. We comment on theoretical and practical implications as well as suggesting issues for future research.

This study tests the prevalence of choice overload (CO) in the U.S. beer market. We reveal that even if CO exists, sellers have mechanisms to reduce CO's negative consequences. The article describes the implementation of search cost-reducing private nudges (i.e., product quality scores and prominently listed specials) sellers commonly utilize to minimize CO's negative consequences. Our results suggest that, while CO exists for some buyers, it can be eliminated by market interactions on the part of the seller. (JEL Classifications: C93, D03, Q13)

The growth and popularity of defined contribution pensions, along with the government's increasing attention to retirement plan costs and investment choices provided, make it important to understand how people select their retirement plan investments. This paper shows how employees in a large firm altered their fund allocations when the employer streamlined its pension fund menu and deleted nearly half of the offered funds. Using administrative data, we examine the changes in plan participant investment choices that resulted from the streamlining and how these changes might affect participants’ eventual retirement wellbeing. We show that streamlined participants’ new allocations exhibited significantly lower within-fund turnover rates and expense ratios, and we estimate this could lead to aggregate savings for these participants over a 20-year period of $20.2 M, or in excess of $9,400 per participant. Moreover, after the reform, streamlined participants’ portfolios held significantly less equity and exhibited significantly lower risks by way of reduced exposures to most systematic risk factors, compared with their non-streamlined counterparts.