Citation

Oprea R. Am. Econ. Rev. 2020; 110(12): 3913-3951.

Copyright

(Copyright © 2020, American Economic Association)

DOI

10.1257/aer.20191717

PMID

unavailable

Abstract

We study the complexity of rules by paying experimental subjects to implement a series of algorithms and then eliciting their willingness-to-pay to avoid implementing them again in the future. The design allows us to examine hypotheses from the theoretical "automata" literature about the characteristics of rules that generate complexity costs. We find substantial aversion to complexity and a number of regularities in the characteristics of rules that make them complex and costly for subjects. Experience with a rule, the way a rule is represented, and the context in which a rule is implemented (mentally versus physically) also influence complexity.

Language: en

Keywords

Belief; Communication; Evolutionary Games; Information and Knowledge; Learning; Repeated Games, Consumer Economics: Theory, Consumer Economics: Empirical Analysis, Search; Stochastic and Dynamic Games; Unawareness, Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making