COnsumer has utility: U= v - t|x-z| - mc

v=utility level of consumer's ideal alternative

x= location of the consumer's ideal alternative

t=3 is a disutility parameter when the ideal alternative is not Zi;

c=1 cost of search

m= number of alternatives evaluated before Zi is chosen

Abstaining from choice yield U=0 . the firm produces two types of products Z1=.25 Z2=.75

1. what is the expected value of choosing at random for an agent with x=.25

2.for what values of v would an agent with x=.25 prefer choosing at random from the alternative to abstaining from choice and getting U=0?

3. discuss qualitatively, why in the Kuksov and Villas Boas 2010 model, more alternatives may discourage participation.

4. in terms of the variables C and t above, when might more alternatives increase the value of choice for agents?