Flexibility in Consumer Purchasing for Uncertain Future Tastes

Consumers often simultaneously purchase multiple units in the same product category. Whether they are best off purchasing an assortment of alternatives or an equal number of one alternative is addressed in this paper. Models of an expected-utility-maximizing consumer are developed, and it is shown that an assortment may have greater expected utility than an equal number of any one alternative. The rationale is that the assortment allows the consumer to choose from inventory the alternative most appropriate for a consumption occasion using preference information not available at the purchase occasion. It is also shown that, when consuming alternatives from inventory, the consumer may forego the alternative offering the most utility in the expectation that it will yield even more utility in the future.