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consumer has utility: U= v – t|x-z| – mc v=utility level of consumer’s ideal alternative x= location of the consumer’s ideal alternative t=3 is a disutility parameter when the ideal alternative is not

consumer has utility:

consumer has utility: U= v – t|x-z| – mcv=utility level of consumer’s ideal alternativex= location of the consumer’s ideal alternativet=3 is a disutility parameter when the ideal alternative is not Zi;c=1 cost of searchm= number of alternatives evaluated before Zi is chosenAbstaining from choice yield U=0 . the firm produces two types of products Z1=.25 Z2=.751. what is the expected value of choosing at random for an agent with x=.252.for what values of v would an agent with x=.25 prefer choosing at random from the alternative to abstaining from choice and getting U=0?3. discuss qualitatively, why in the Kuksov and Villas Boas 2010 model, more alternatives may discourage participation.4. in terms of the variables C and t above, when might more alternatives increase the value of choice for agents?

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