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Targeted information and limited attention

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  • Andreas Hefti
  • Shuo Liu

Abstract

We examine the implications of limited consumer attention for the targeting decisions of competing firms. Limited attention alters the strategic role of information provision as firms may become incentivized to behave as mass advertisers, despite perfect targeting abilities. We analyze the consequences of limited attention for targeting, strategic pricing, market shares, attention competition between firms, and the value of marketing data to firms. Accounting for limited attention in an otherwise standard targeting framework can explain several recent key issues from the advertising industry, such as consumer‐side information overload or the increased usage of ad blocking tools.

Suggested Citation

  • Andreas Hefti & Shuo Liu, 2020. "Targeted information and limited attention," RAND Journal of Economics, RAND Corporation, vol. 51(2), pages 402-420, June.
    • Handle: RePEc:bla:randje:v:51:y:2020:i:2:p:402-420
    DOI: 10.1111/1756-2171.12319
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    References listed on IDEAS

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    Cited by:

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    3. Emanuele Bacchiega & Elias Carroni & Alessandro Fedele, 2023. "Monopolistic Duopoly," BEMPS - Bozen Economics & Management Paper Series BEMPS101, Faculty of Economics and Management at the Free University of Bozen.

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