Using controlled experiments, we examine how individuals make choices when faced with multiple options. Choice tasks are designed to mimic the selection of health insurance, prescription drug, or retirement savings plans. In our experiment, available options can be objectively ranked allowing us to examine optimal decision making. First, the probability of a person selecting the optimal option declines as the number of options increases, with the decline being more pronounced for older subjects. Second, heuristics differ by age with older subjects relying more on suboptimal decision rules. In a heuristics validation experiment, older subjects make worse decisions than younger subjects.

Coupons, in the form of``promotion codes'', are now a mainstay of the online shopping experience, but online coupon redemption differs substantively from that in traditional retailing. Offline redemption of coupons is customer-initiated while Internet shoppers are usually prompted to enter a code towards the conclusion of the checkout process. This prompting may influence shopper perceptions and behaviors such as shopping cart abandonment. Results showed strong negative effects on price fairness, satisfaction, and purchase completion in the code-absent group and positive effects on fairness and satisfaction in the code-present group. Presents implications for effective market segmentation through the use of online coupon codes. Few things stir up a consumer revolt quicker than the notion that someone else is getting a better deal (Streitfield, 2000).

We investigate the impact of patient-obtained medical information (POMI) on the physician-patient relationship when patients, as a group, are heterogeneously informed and a physician's interests do not coincide with those of her patients. Introducing additional well-informed patients to the population discontinuously affects the physician's strategy, having no effect unless a sufficient quantity is added. When few patients are well informed, increasing the precision of their information level has no effect on the physician's strategy. Alternately, when a sufficient number of well-informed patients exists, increasing the precision of their information allows all patients to free-ride by receiving more appropriate treatment recommendations.Counterintuitively, we also identify circumstances under which increasing the general level of information may potentially harm patients.

S ocial sharing of information goods-wherein a single good is purchased and shared through a network of acquaintances such as friends or coworkers-is a significant concern for the providers of these goods. The effect of social sharing on firm pricing and profits depends critically on two elements: the structure of the underlying consumer network and the mechanism used by groups to decide whether to purchase at a given price. We examine the effect of social sharing under different network structures (decentralized, centralized, and complete), which reflect a range of market conditions. Moreover, we draw from the mechanism design literature to examine several approaches to group decision making. Our results suggest that a firm can benefit from increased social sharing if the level of sharing is already high, enabling a pricing strategy targeted primarily at sharing groups rather than individuals. However, the point at which sharing becomes marginally beneficial for a firm depends on both the distribution of group sizes (which derives from the network structure) and the group decision mechanism. Additional insights are obtained when we extend the model to capture homophily in group formation and the potential that a subset of consumers will never share for ethical reasons.

Previous studies have demonstrated that a multitude of options can lead to choice overload, reducing decision quality. Through controlled experiments, we examine sequential choice architectures that enable the choice set to remain large while potentially reducing the effect of choice overload. A specific tournament-style architecture achieves this goal. An alternate architecture in which subjects compare each subset of options to the most preferred option encountered thus far fails to improve performance due to the status quo bias. Subject preferences over different choice architectures are negatively correlated with performance, suggesting that providing choice over architectures might reduce the quality of decisions. JEL Codes: C91, D03