The brain in the supermarket

Thursday, March 26, 2015 - 23:30 in Mathematics & Economics

Say you’re out shopping for basic household goods — perhaps orange juice and soup. Or light bulbs. Or diapers for your young child. How do you choose the products you buy? Is it a complicated decision, or a simple one? It could be complex: Factors like price, quality, and brand loyalty may run through your mind. Indeed, some scholars have developed complicated models of consumer decision-making, in which people accumulate substantial product knowledge, then weigh that knowledge against the opportunity to explore less-known products. But in a new paper, MIT researchers suggest that your brain is making a simpler calculation when you shop: You are most likely deploying an “index strategy,” a straightforward ranking of products. It may not be an absolutely perfect calculation, given all the available information, but the study suggests that an index strategy comes very close to being optimal, and is a far easier way for consumers to...

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