Bundle Selection and Variety Seeking: The Importance of Combinatorics

Abstract

AbstractWhen consumers select bundles of goods, they may construct those sequentially (e.g., building a bouquet one flower at a time) or make a single choice of a prepackaged bundle (e.g., selecting an already-complete bouquet). Previous research suggested that the sequential construction of bundles encourages variety seeking. The present research revisits this claim and offers a theoretical explanation rooted in combinatorics and norm communication. When constructing a bundle, a consumer chooses among different choice permutations, but when selecting amongst prepackaged bundles, the consumer typically considers unique choice combinations. Because variety is typically overrepresented among permutations compared to combinations, certain consumers (in particular, those with similar attitudes toward items that could compose a bundle) are induced by these different numbers of pathways to variety to display more or less variety-seeking behavior. This is in part explained by the variety norms communicated by different choice architectures, cues most likely to be inferred and used by those who are indifferent between the potential bundle components and thus looking for guidance. Across 5 studies in the main text and 11 in the web appendix, this article tests this account and offers preliminary exploration of newly identified residual effects that the pathways-to-variety account cannot explain.