DIVERSIFICATION BIAS - EXPLAINING THE DISCREPANCY IN VARIETY SEEKING BETWEEN COMBINED AND SEPARATED CHOICES

Recent research has revealed a pattern of choice characterized as a diversification bias: If people make combined choices of quantities of goods for future consumption, they choose more variety than if they make separate choices immediately preceding consumption. This phenomenon is explored in a series of experiments in which the researchers first eliminated several hypotheses that held that the discrepancy between combined and separate choice can be explained by traditional accounts of utility maximization. On the basis of results of further experiments, it was concluded that the diversification bias is largely attributable to 2 mechanisms: time contraction, which is the tendency to compress time intervals and treat long intervals as if they were short, and choice bracketing, which is the tendency to treat choices that are framed together differently from those that are framed apart. The researchers describe how the findings can be applied in the domains of marketing and consumer education.