  In search engines, online marketplaces and other human-computer interfaces
large collectives of individuals sequentially interact with numerous
alternatives of varying quality. In these contexts, trial and error
(exploration) is crucial for uncovering novel high-quality items or solutions,
but entails a high cost for individual users. Self-interested decision makers,
are often better off imitating the choices of individuals who have already
incurred the costs of exploration. Although imitation makes sense at the
individual level, it deprives the group of additional information that could
have been gleaned by individual explorers. In this paper we show that in such
problems, preference diversity can function as a welfare enhancing mechanism.
It leads to a consistent increase in the quality of the consumed alternatives
that outweighs the increased cost of search for the users.
