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On the strategic use of attention grabbers

Author

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  • Eliaz, Kfir

    (Department of Economics, Brown University)

  • Spiegler, Ran

    (Department of Economics, University College London and Tel Aviv University)

Abstract

When a firm decides which products to offer or put on display, it takes into account the products' ability to attract attention to the brand name as a whole. Thus, the value of a product to the firm emanates from the consumer demand it directly meets, as well as the indirect demand it generates for the firms' other products. We explore this idea in the context of a stylzed model of competition between media content providers (broadcast TV channels, internet portals, newspapers) over consumers with limited attention. We characterize the equilibrium use of products as attention grabbers and its implications for consumer conversion, industry profits and (mostly vertical) product differentiation.

Suggested Citation

  • Eliaz, Kfir & Spiegler, Ran, 2011. "On the strategic use of attention grabbers," Theoretical Economics, Econometric Society, vol. 6(1), January.
  • Handle: RePEc:the:publsh:758
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    References listed on IDEAS

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    1. Masatlioglu, Yusufcan & Nakajima, Daisuke, 2013. "Choice by iterative search," Theoretical Economics, Econometric Society, vol. 8(3), September.
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    Cited by:

    1. Sürücü, Oktay, 2016. "Welfare improving discrimination based on cognitive limitations," Research in Economics, Elsevier, vol. 70(4), pages 608-622.
    2. Karpov, Aleksandr, 2017. "Price competition and limited attention," Economics Discussion Papers 2017-89, Kiel Institute for the World Economy (IfW).
    3. Paola Manzini & Marco Mariotti, 2018. "Competing for Attention: Is the Showiest Also the Best?," Economic Journal, Royal Economic Society, vol. 128(609), pages 827-844, March.
    4. Demirkan, Yusufcan & Kimya, Mert, 2020. "Hazard rate, stochastic choice and consideration sets," Journal of Mathematical Economics, Elsevier, vol. 87(C), pages 142-150.
    5. Edward John Dorrell Webb, 2014. "Do we see monopoly or duopoly? The influence of perception on entry deterrence," Discussion Papers 14-20, University of Copenhagen. Department of Economics.
    6. Dahremöller, Carsten & Fels, Markus, 2015. "Product lines, product design, and limited attention," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 437-456.
    7. Paola Manzini & Marco Mariotti, 2014. "Stochastic Choice and Consideration Sets," Econometrica, Econometric Society, vol. 82(3), pages 1153-1176, May.
    8. Sürücü, Oktay & Brangewitz, Sonja & Mir Djawadi, Behnud, 2017. "Asymmetric dominance effect with multiple decoys for low- and high-variance lotteries," Center for Mathematical Economics Working Papers 574, Center for Mathematical Economics, Bielefeld University.
    9. Pedro Bordalo & Nicola Gennaioli & Andrei Shleifer, 2016. "Competition for Attention," Review of Economic Studies, Oxford University Press, vol. 83(2), pages 481-513.
    10. Olivier Gossner & Jakub Steiner & Colin Stewart, 2021. "Attention Please!," Econometrica, Econometric Society, vol. 89(4), pages 1717-1751, July.
    11. Castillo, Geoffrey, 2020. "The attraction effect and its explanations," Games and Economic Behavior, Elsevier, vol. 119(C), pages 123-147.
    12. Paola Manzini & Marco Mariotti, 2015. "Modelling Imperfect Attention," Working Papers 744, Queen Mary University of London, School of Economics and Finance.
    13. Suzuki, Toru, 2016. "Reminder game: Indirectness in persuasion," Games and Economic Behavior, Elsevier, vol. 100(C), pages 240-256.
    14. Sürücü, Oktay & Djawadi, Behnud Mir & Recker, Sonja, 2019. "The asymmetric dominance effect: Reexamination and extension in risky choice – An experimental study," Journal of Economic Psychology, Elsevier, vol. 73(C), pages 102-122.
    15. Paola Manzini & Marco Mariotti, 2014. "Stochastic Choice and Consideration Sets," Econometrica, Econometric Society, vol. 82(3), pages 1153-1176, May.
    16. Kaiser Karen & Schwabe Rainer, 2012. "Preference for Variety," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 12(1), pages 1-32, January.
    17. Levon Barseghyan & Francesca Molinari & Matthew Thirkettle, 2021. "Discrete Choice under Risk with Limited Consideration," American Economic Review, American Economic Association, vol. 111(6), pages 1972-2006, June.
    18. Michael Grubb, 2015. "Failing to Choose the Best Price: Theory, Evidence, and Policy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(3), pages 303-340, November.
    19. Kovach, Matthew, 0. "Twisting the truth: foundations of wishful thinking," Theoretical Economics, Econometric Society.
    20. Bleile, Jörg, 2016. "Limited Attention in Case-Based Belief Formation," Center for Mathematical Economics Working Papers 518, Center for Mathematical Economics, Bielefeld University.
    21. Masatlioglu, Yusufcan & Nakajima, Daisuke, 2013. "Choice by iterative search," Theoretical Economics, Econometric Society, vol. 8(3), September.
    22. Liang, Hanchao & Yang, Chunpeng & Zhang, Rengui & Cai, Chuangqun, 2017. "Bounded rationality, anchoring-and-adjustment sentiment, and asset pricing," The North American Journal of Economics and Finance, Elsevier, vol. 40(C), pages 85-102.
    23. Paola Manzini & Marco Mariotti, 2018. "Competing for Attention: Is the Showiest Also the Best?," Economic Journal, Royal Economic Society, vol. 128(609), pages 827-844, March.
    24. Toru Suzuki, 2012. "Persuasive Silence," Jena Economic Research Papers 2012-014, Friedrich-Schiller-University Jena.
    25. Hefti, Andreas, 2018. "Limited attention, competition and welfare," Journal of Economic Theory, Elsevier, vol. 178(C), pages 318-359.

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    More about this item

    Keywords

    Bounded rationality; irrelevant alternatives; limited attention; consideration sets; preferences over menus; marketing; persuasion; conversion rates; media platforms;
    All these keywords.

    JEL classification:

    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • M39 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Other

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