How choice proliferation affects revealed preferences

Whereas the literature on choice overload has shown that people tend to defer their choice or experience less satisfaction under choice proliferation, this paper aims to test how the profusion of choice directly affects individuals' revealed preferences over options. To do so, we run an experiment where subjects have to compare familiar (i.e., easy, salient and relatively safe) and unfamiliar options under different choice contexts (Large or Small choice sets). We hypothesize that, as the choice set expands, the decisions become harder and more costly and subjects may find familiar items relatively more attractive. Our results provide clear evidence of set size dependence of revealed preferences: Subjects prefer familiar items more frequently in larger choice sets. This evidence is robust to a number of experimental variations and statistical controls.