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Naive Allocation

Definition 1

Decision researchers have found that people prefer to spread limited resources evenly across a set of possibilities. This can be referred as naive allocation. For example, consumers may invest equal amounts of money across different investment options. Similarly, the diversification bias shows that consumers like to spread out consumption choices across a variety of goods. Research suggests that choice architects can work with these tendencies due to decision makers’ partition dependence. For example, separating healthy food menu options into different menu categories (e.g., “fruits”, “vegetables”) and combining unhealthy options into one single menu category (e.g., “candies and cookies”), one can steer consumers to choose a more healthy options and fewer unhealthy options (Johnson et al., 2012).

Source: Behavioral Economics

Definition 2

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