When Smaller Menus Are Better: Variability in Menu-Setting Ability
研究发现，在401(k)养老金计划中，小菜单比大菜单客观更优，因为菜单设置者能力差异导致低能力者提供更多选项，但高能力者提供的菜单质量更高。
Are large menus better than small menus? Recent literature argues that individuals' apparent preference for smaller menus can be explained by their behavioral biases or informational limitations. These explanations imply that absent behavioral or informational effects, larger menus would be objectively better. However, in an important economic context—401(k) pension plans—we find that larger menus are objectively worse than smaller menus, as measured by the maximum Sharpe ratio achievable. We propose a model in which menu setters differ in their ability to preselect the menu. We show that when the cost of increasing the menu size is sufficiently small, a lower-ability menu setter optimally offers more items in the menu than a higher-ability menu setter. Nevertheless, the menu optimally offered by a higher-ability menu setter remains superior. This results in a negative relation between menu size and menu quality: smaller menus are better than larger menus. This paper was accepted by Wei Xiong, finance.