Peter Earl,  Lana Friesen & Kristin Hatherley, School of Economics Discussion Paper No. 449 December 2011, School of Economics, The University of Queensland. Australia.


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This paper draws lessons about the allocation of resources to research aimed at studying the efficiency of consumer decision making in complex, fast-moving markets. These lessons emerged during research involving a large-sample survey of choices of mobile phone service plans by Australian consumers. In this kind of market, researchers will run into difficulties in collecting and evaluating data, and market conditions will not stand still while they address these problems. It is even possible that what seems suboptimal to researchers will sometimes actually be highly appropriate choice for consumers. The paper concludes by advocating the use of simpler methods to approximate the prevalence of decision-making inefficiency—such as collaborative work with owners of websites that try to assist consumers—as knowledge of optimal choices is not essential for understanding the sources of inefficiency or devising methods by which better choices might be made.