Paradox of choice and sharing personal information

The purpose of this study is to investigate the relationship between a firm’s strategy and consumers’ decisions in the presence of the paradox of choice and sharing personal information. The paradox of choice implies that having too many choices does not necessarily ensure happiness and sometimes having less is more. A new model is constructed introducing a factor of information sharing into the model of a previous study that embedded the paradox of choice only (Kinjo and Ebina in AI Soc 30(2):291–297, 2015). A key feature of the model is its disutility function. It is demonstrated that if the sign of the cross derivative of the function is positive (negative) at the optimum, there is a positive (negative) correlation between the degree of sharing personal information chosen by the consumers and the number of products offered by the firm in its recommendation systems. It is also numerically indicated that the profit function of the firm becomes convex or concave depending on the shape of the disutility function. These results suggest that firms should carefully investigate the shape of the disutility function, under the paradox of choice and sharing personal information.

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