Complexity and Biases

We examine experimentally how complexity affects decision-making,
when individuals choose among different products with varying
benefits and costs. We find that complexity in costs leads to
choosing a high-benefit product, with high costs and overall lower
payoffs. In contrast, when complexity is in the benefits of the
product, we cannot reject the hypothesis of random mistakes. We
also examine the role of heterogeneous complexity. We find that
individuals still (mistakenly) choose the high-benefit but costly
product, even if cheaper and simple products are available. Our
results suggest that salience is a main driver of choices under
different forms of complexity.