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What Makes a Rule Complex?

  • Ryan Oprea
American Economic Review
vol. 110, no. 12, December 2020
(pp. 3913-51)
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Abstract

We study the complexity of rules by paying experimental subjects to implement a series of algorithms and then eliciting their willingness-to-pay to avoid implementing them again in the future. The design allows us to examine hypotheses from the theoretical "automata" literature about the characteristics of rules that generate complexity costs. We find substantial aversion to complexity and a number of regularities in the characteristics of rules that make them complex and costly for subjects. Experience with a rule, the way a rule is represented, and the context in which a rule is implemented (mentally versus physically) also influence complexity.

Citation

Oprea, Ryan. 2020. "What Makes a Rule Complex?" American Economic Review, 110 (12): 3913-51. DOI: 10.1257/aer.20191717

Additional Materials

JEL Classification

  • C73 Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
  • D11 Consumer Economics: Theory
  • D12 Consumer Economics: Empirical Analysis
  • D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
  • D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making