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

Recent research has revealed a pattern of choice characterized as a di versification bias: If people make combined choices of quantities of g oods for future consumption, they choose more variety than if they mak e 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 c ombined and separate choice can be explained by traditional accounts o f utility maximization. On the basis of results of further experiments , it was concluded that the diversification bias is largely attributab le to 2 mechanisms: time contraction, which is the tendency to compres s time intervals and treat long intervals as if they were short, and c hoice bracketing, which is the tendency to treat choices that are fram ed together differently from those that are framed apart. The research ers describe how the findings can be applied in the domains of marketi ng and consumer education.