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Salience and Consumer Choice

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  • Pedro Bordalo
  • Nicola Gennaioli
  • Andrei Shleifer

Abstract

We present a theory of context-dependent choice in which a consumer’s attention is drawn to salient attributes of goods, such as quality or price. An attribute is salient for a good when it stands out among the good’s attributes relative to that attribute’s average level in the choice set ðor, more broadly, the choice contextÞ. Consumers attach disproportionately high weight to salient attributes, and their choices are tilted toward goods with higher quality/price ratios. The model accounts for a variety of disparate evidence, including decoy effects and contextdependent willingness to pay. It also suggests a novel theory of misleading sales.

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Paper provided by Harvard University OpenScholar in its series Working Paper with number 62321.

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Handle: RePEc:qsh:wpaper:62321

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Citations

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Cited by:
  1. Kalaycı, Kenan & Serra-Garcia, Marta, 2012. "Complexity and Narrow Bracketing in Credit Choice," Discussion Papers in Economics, University of Munich, Department of Economics 13035, University of Munich, Department of Economics.
  2. Armstrong, Mark & Chen, Yongmin, 2012. "Discount pricing," MPRA Paper 39074, University Library of Munich, Germany.
  3. repec:oup:qjecon:v:128:y:2012:i:1:p:53-104 is not listed on IDEAS
  4. Pedro Bordalo & Nicola Gennaioli & Andrei Shleifer, . "Salience and Asset Prices," Working Paper 69726, Harvard University OpenScholar.
  5. Justine Hastings & Jesse M. Shapiro, 2012. "Mental Accounting and Consumer Choice: Evidence from Commodity Price Shocks," NBER Working Papers 18248, National Bureau of Economic Research, Inc.
  6. Daniel Friedman (University of California at Santa Cruz) József Sákovics (The University of Edinburgh), 2014. "Tractable Consumer Choice," ESE Discussion Papers, Edinburgh School of Economics, University of Edinburgh 240, Edinburgh School of Economics, University of Edinburgh.
  7. Edward J. Webb, 2014. "Perception and quality choice in vertically differentiated markets," Discussion Papers 14-07, University of Copenhagen. Department of Economics.
  8. Cunningham, Thomas, 2013. "Biases and Implicit Knowledge," MPRA Paper 50292, University Library of Munich, Germany.
  9. Keith M Marzilli Ericson & Amanda Starc, 2013. "How Product Standardization Affects Choice: Evidence from the Massachusetts Health Insurance Exchange," NBER Working Papers 19527, National Bureau of Economic Research, Inc.

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