top of page
Diversification Bias
Definition 1
Likelihood of selecting more choice options than are needed or useful. (See Projection Bias.)
Source: Behavioral Science Lab, 2017
Definition 2
People seek more variety when they choose multiple items for future consumption simultaneously than when they make choices sequentially, i.e. on an ‘in the moment’ basis. Diversification is non-optimal when people overestimate their need for diversity (Read & Loewenstein, 1995). In other words, sequential choices lead to greater experienced utility. For example, before going on vacation I may upload classical, rock and pop music to my MP3 player, but on the actual trip I may mostly end up listening to my favorite rock music.
Source: Behavioral Economics
bottom of page