Advanced Search
MyIDEAS: Login to save this paper or follow this series

Competition for Attention

Contents:

Author Info

  • Pedro Bordalo
  • Nicola Gennaioli
  • Andrei Shleifer

Abstract

We present a model of market competition and product differentiation in which consumers' attention is drawn to the products' most salient attributes. Firms compete for consumer attention via their choices of quality and price. With salience, strategic positioning of each product affects how all other products are perceived. With this attention externality, depending on the cost of producing quality some markets exhibit “commoditized” price salient equilibria, while others exhibit “de-commoditized” quality salient equilibria. When the cost of producing quality changes, innovation can lead to a radical change in markets. In the context of financial innovation, the model generates the well documented phenomenon of “reaching for yield”.

(This abstract was borrowed from another version of this item.)

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://scholar.harvard.edu/shleifer/node/76811
Download Restriction: no

Bibliographic Info

Paper provided by Harvard University OpenScholar in its series Working Paper with number 76811.

as in new window
Length:
Date of creation: Dec 1969
Date of revision:
Handle: RePEc:qsh:wpaper:76811

Contact details of provider:
Postal: 1737 Cambridge Street, Cambridge, MA 02138
Phone: 617-496-2450
Fax: 617-496-5149
Web page: http://scholar.harvard.edu
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Eliaz, Kfir & Spiegler, Ran, 2009. "Consideration Sets and Competitive Marketing," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7456, C.E.P.R. Discussion Papers.
  2. Alisdair McKay & Filip Matejka, 2011. "Simple Market Equilibria with Rationally Inattentive Consumers," Boston University - Department of Economics - Working Papers Series, Boston University - Department of Economics WP2011-025, Boston University - Department of Economics.
  3. Xavier Gabaix & David Laibson, 2006. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 121(2), pages 505-540, May.
  4. Azar, Ofer H., 2008. "The effect of relative thinking on firm strategy and market outcomes: A location differentiation model with endogenous transportation costs," Journal of Economic Psychology, Elsevier, Elsevier, vol. 29(5), pages 684-697, November.
  5. Anderson, Simon P & de Palma, Andre, 1992. "Multiproduct Firms: A Nested Logit Approach," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 40(3), pages 261-76, September.
  6. Andreas M. Hefti, 2011. "Attention competition," ECON - Working Papers, Department of Economics - University of Zurich 028, Department of Economics - University of Zurich.
  7. Xavier Gabaix, 2011. "A Sparsity-Based Model of Bounded Rationality," NBER Working Papers 16911, National Bureau of Economic Research, Inc.
  8. Spiegler, Ran, 2014. "Bounded Rationality and Industrial Organization," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199334261, October.
  9. Brad M. Barber & Terrance Odean, 2008. "All That Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 21(2), pages 785-818, April.
  10. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(1), pages 3-13, January.
  11. Michele Piccione & Ran Spiegler, 2010. "Price Competition under Limited Comparability," Levine's Working Paper Archive 661465000000001143, David K. Levine.
  12. Spiegler, Ran & Eliaz, Kfir, 2011. "On the strategic use of attention grabbers," Theoretical Economics, Econometric Society, Econometric Society, vol. 6(1), January.
  13. Persson, Petra, 2013. "Attention Manipulation and Information Overload," Working Paper Series, Research Institute of Industrial Economics 995, Research Institute of Industrial Economics.
  14. Stefano Dellavigna & Joshua M. Pollet, 2009. "Investor Inattention and Friday Earnings Announcements," Journal of Finance, American Finance Association, American Finance Association, vol. 64(2), pages 709-749, 04.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. James M. Sallee, 2013. "Rational Inattention and Energy Efficiency," NBER Working Papers 19545, National Bureau of Economic Research, Inc.
  2. Geoffroy de Clippel & Kfir Elias & Kareen Rozen, 2013. "Competing for Consumer Inattention," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1901, Cowles Foundation for Research in Economics, Yale University.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:qsh:wpaper:76811. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jon Sagotsky) The email address of this maintainer does not seem to be valid anymore. Please ask Jon Sagotsky to update the entry or send us the correct address.

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.