Beauty, Qualifications, and Bounded Rationality: Consumer Choice under Asymmetric Information

This paper examines consumer choice in credence good markets marked by asymmetric information and weak regulation. Using a within-subject classroom experiment (n = 52; 1,144 incentivized decisions), participants selected trainers under varying trade-offs between attractiveness, qualifications, price, and injury risk. Beauty-based heuristics dominated under ambiguity, but most shifted to qualified trainers when certification signals became available—even at higher prices or lower attractiveness. A small subset continued to prioritize appearance, reflecting context-sensitive bounded rationality. These findings inform consumer protection policy and illustrate how contextual economics explains behavior shaped by institutional and informational environments.