Given how much risk aversion and the cost of acquiring information affect people's decisions, I wonder whether the makers of the iPad and the Kindle are turning away potential customers by offering both a Wi-Fi only and a Wi-Fi + 3G version of their products.
Both the Kindle and the iPad are gadgets unlike anything else most of us have ever owned, so it's hard for us to know exactly how we'd use them. Whatever the customer decides, he is set up for second guessing.
If he gets the Wi-Fi only Kindle, he might find himself in many situations where Wi-Fi isn't available and 3G would have come in handy.
If he splurges for the Wi-Fi + 3G model, maybe he'll discover that he just uses the Kindle around the house after all and will lament wasting $50 for the 3G option.
It's even worse for the iPad: Not only does the 3G-capable version cost $120 more, it also requires a 3G data plan that runs about $15 a month. Luckily, diehard flip floppers can cancel the data plan at any time, thus cutting their losses somewhat.
Classic economic theory tells us that more choice can only make consumers better off (how can a new choice makes us worse off if the original choice is still available?). But, as I've argued before, perhaps retailers (or regulators) should make decisions for us when the choice is too technical for most people. The book "The Paradox of Choice" suggests that consumers might even be paralyzed by some decisions, to the point of not making the purchase.
For what it's worth, a while ago I happily bought the second-generation Kindle, which only had 3G (you don't really need Wi-Fi if you have 3G) and thus spared me the research and soul-searching required to decide whether 3G was worth the extra money.
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