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Salience

Author

Listed:
  • Andrei Shleifer

    (Department of Economics, Harvard University, Cambridge, Massachusetts, USA)

  • Nicola Gennaioli

    (Finance Department, Bocconi University, Milan, Italy)

  • Pedro Bordalo

    (Said Business School, Oxford University, Oxford, United Kingdom)

Abstract

We review the fast-growing work on salience and economic behavior. Psychological research shows that salient stimuli attract human attention bottom up due to their high contrast with surroundings, their surprising nature relative to recalled experiences, or their prominence. The Bordalo, Gennaioli & Shleifer (2012, 2013b, 2020) models of salience show how bottom-up attention can distort economic choice by distracting decision makers from their immediate goals or from relevant choice attributes. This approach unifies probability weighting, menu effects, reference points, and framing as distinct manifestations of bottom-up attention. We highlight new predictions and discuss open conceptual questions, as well as potential applications in finance, industrial organization, advertising, and politics.

Suggested Citation

  • Andrei Shleifer & Nicola Gennaioli & Pedro Bordalo, 2022. "Salience," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 521-544, August.
    • Handle: RePEc:anr:reveco:v:14:y:2022:p:521-544
    DOI: 10.1146/annurev-economics-051520-011616
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    Other versions of this item:

    • Pedro Bordalo & Nicola Gennaioli & Andrei Shleifer, 2021. "Salience," NBER Working Papers 29274, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    attention; memory; reminders; risky choice;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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