When making important decisions such as choosing health insurance or a school, people are often uncertain what levels of attributes will suit their true preference. After choice, they might realize that their uncertainty resulted in a mismatch: choosing a sub-optimal alternative, while another available alternative better matches their needs. We study here the overall impact, from a central planner’s perspective, of decisions under such uncertainty. We use the representation of Voronoi tessellations to locate all individuals and alternatives in an attribute space. We provide an expression for the probability of correct match, and calculate, analytically and numerically, the average percentage of matches. We test dependence on the level of uncertainty and location. We find that the overall mismatch is considerable even for low uncertainty—a possible concern for policy makers. We further explore a commonly used practice—allocating service representatives to assist individuals’ decisions. We show that within a given budget and uncertainty level, the effective allocation is for individuals who are close to the boundary between several Voronoi cells, but are not right on the boundary.
Bibliographical noteFunding Information:
T.D. is grateful to the Azrieli Foundation for Azrieli Fellowships and is supported by a quantum science and technologies fellowship given by the Israeli council for higher education. R.P was supported by the Israeli Science Foundation and by the KMart foundation of the Hebrew University. Z.R. was supported by an Advanced Grant from the European Research Council under the European Union’s Horizon 2020 research and innovation programme/ERC Grant Agreement No. 786758. The authors thank Eliya Horn for her research assistance.
© 2020, The Author(s).