The Decision-Conflict Logit

Abstract

We study two random non-forced choice models that explain behavioural patterns suggesting that the no-choice outside option is often selected when people find it hard to decide between the market alternatives available to them, even when these are few and desirable. The decision-conflict logit extends the logit model with an outside option by assigning a menu-dependent value to that option. This value captures the degree of complexity/decision difficulty at the relevant menu and allows for the choice probability of the outside option to either increase or decrease when the menu is expanded, depending on how many as well as on how attractive options are added to it. The multicriteria logit is a special case of this model and introduces multiple utility functions that jointly predict behaviour in a multiplicative-logit way. Every multicriteria logit admits a tractable discrete-choice formulation.