Understanding the value individuals place on freedom of choice
Individuals regularly make choices in situations of abundance of options: consumer choice, insurance, voting, etc. According to a widespread view (especially among economists), this abundance of choice is desirable: the more we have the choice, the freer we are, and the more likely we are to find the option that best fits our needs and preferences. <br /> <br />The overall objective of the project is to study the value individuals place on freedom of choice. In other words, the question is whether and to what extent the freedom enjoyed by individuals affects their well-being. We consider this question from two perspectives. <br /> <br />A first perspective is to study how people value and compare different sets of choices (or menus). These sets can be of different sizes, contain more or varied options and be more or less subject to external constraints (a third person in particular). The questions we are studying are: Do people have a preference for a wider range of opportunities? How sensitive are they to the interference of others? <br /> <br />In a second perspective, we study the effects of the abundance (or overabundance) of opportunities on individual choices. It is a question of identifying whether the increase in the size of the set of choices leads to phenomena of inconsistency of choice and preferences. For example, does greater freedom favor a preference for familiar options? But beyond identifying the phenomenon (informed in psychology), it is to understand the roots of this phenomenon. Are the reasons related to cognitive explanations (difficulty in comparing options) or purely psychological (fear of regret for example).
The methods used are those of experimental economics. They consist of placing individuals in a controlled environment and in which a real incentive structure pushes them to reveal their preferences. Since it appears difficult to measure preferences on menus with real data, the experimental method appears adapted.
But we also use empirical methods based on hypothetical choice experiments (with an online questionnaire in particular). This can enable us to complete and deepen the lessons learned from laboratory experiments. Although there is no monetary incentive, these surveys still allow us to identify the value of freedom of choice in areas such as health or education.
Lastly, field experiments are envisaged, in particular by exploiting the digital economy (for example so-called crowdfunding sites) in order to study the effect of the context of choice on individual behavior.
We emphasize here the first results of the project.
1) Do individuals have a preference or aversion to freedom of choice? To answer this question, we conducted a laboratory experiment in which participants had to evaluate different sets of choices. The main result is: our subjects have an aversion to choice, in the sense that they are not willing to add options they do not value.
2) Are individuals willing to delegate the decision? The goal is to study if and why individuals value the right to make decisions, that is, to keep decision-making rather than delegate it to another person. For this, we conduct experiments in France and Japan. The main results are: individuals have a preference for keeping the right of decision and this preference is explained by a taste for autonomy. Moreover, we do not find any significant difference between France and Japan.
3) Does the abundance of choice affect the taste for familiarity? The objective is to investigate whether the size of the choice set affects the nature of the option selected by an individual and, in particular, the choice between familiar and unfamiliar goods. The result is that our subjects have a higher probability of choosing a familiar option when the size of the choice set increases. This result can be explained by a difficulty in comparing a larger number of options or a certain inattention to unfamiliar options.
Current projects are:
1) A first project aims to study how individuals apprehend and evaluate freedom of choice and to what extent these judgments are consistent with the axioms postulated in the theories of the measure of freedom of choice. To do this, we use the Hypothetical Choice Experiments method and we plan to take this survey online in several countries (France, USA and Japan).
2) The question of freedom of choice led us to study the question of freedom in a collective setting. The aim is to study how collective deliberation and how to organize it affect individual preferences and collective choice. To answer this question, we take an experimental approach where subjects will have to decide how a resource should be distributed.
Future projects (launch in the first half of 2019):
3) Preferences for decision rights and how they vary from one culture to another. The goal is to conduct the same experiment in several countries, which differ in culture (defined as the set of rules and norms shared by members of a community).
4) Choices in situations of plenty of choice. The aim is to develop experiences that make it possible to distinguish the different sources of the so-called paradox of choice phenomenon: Why do individuals tend to make choices of lesser quality? Are these purely cognitive (difficulty comparing options) or psychological (regret) sources?
- «Attitude to choice: Some experimental evidence of choice aversion«, F. Le Lec and B. Tarroux, «conditionally accepted« in the Journal of the European Economic Association.
- «On the Roots of the Intrinsic Value of Decision Rights«
This project aims at investigating the value that people attach to freedom, i.e.., the extent and nature of opportunities they have.
The project consists of two main tasks.
1) In the first task, our goal is to study individual attitudes towards freedom: how do they evaluate opportunity situations? In this project, we focus on, first, the attractiveness of opportunity sets (i.e., sets of alternatives available to them for choice) and, second, the aversion of being prevented to do some actions by others (like someone else or government).
As individual attitude toward freedom is expected to be influenced by cultural norms and values, one of our objectives is to make a cross-cultural investigation: How do people from different cultural backgrounds differ in terms of the intrinsic value they place on freedom and decision right?
2) In the second task, we intend to study on the negative consequences of choice proliferation on individual decision process, the so-called choice overload effect. Our objective is two-fold. (a) Our aim is to disentangle various explanations of this (possible) phenomenon. We can put them in two broad categories: cognitive explanations and preference ones (regret, loss aversion, etc.). (b) Another topic we intend to study in this task is how people can escape from choice overload: What kind(s) of mechanisms or choice architectures allow them to avoid negative effects of choice proliferation?
To investigate these questions, we plan to use experimental methodology: laboratory experiment but also surveys (hypothetical choice) and field experiments. However, we rely on its complementarity with methodologies like theory (in particular theoretical economics), normative analysis and philosophy.
Monsieur BENOIT TARROUX (GROUPE D'ANALYSE ET DE THEORIE ECONOMIQUE LYON - ST-ETIENNE)
The author of this summary is the project coordinator, who is responsible for the content of this summary. The ANR declines any responsibility as for its contents.
GATE GROUPE D'ANALYSE ET DE THEORIE ECONOMIQUE LYON - ST-ETIENNE
CREM Centre de Recherche en Economie et Management
Help of the ANR 580,668 euros
Beginning and duration of the scientific project: December 2016 - 48 Months