Evaluating opportunities when more is less

There exists psychological evidence that consumers do not consider all available items in the market, which can lead to the “more-is-less” effect, a phenomenon where having more options causes a welfare reduction (Llears et al. in J Econ Theory 170:70–85, 2017). Under this more-is-less effect, we face a dilemma that adding new opportunities may both improve and worsen individual well-being. This study proposes a hypothesis that “more is always better,” which implies that adding new opportunities cannot worsen individual well-being, is a bias to which moral heuristics leads. A satisfactory resolution of this dilemma is act-consequentialism over menus, which is an ex-post and third-party evaluation of opportunity sets. We provide an axiomatic foundation for act-consequentialism over menus and apply it to policymakers’ menu-providing policies.