IDEAS home Printed from
   My bibliography  Save this book chapter

Salience in markets

In: Handbook of Behavioral Industrial Organization


  • Fabian Herweg
  • Daniel Müller
  • Philipp Weinschenk


A consumer’s evaluation of a product often depends on the choice context. Specifically, the choice context influences which of a product’s attributes the consumer perceives as outstanding, i.e., salient. This chapter is devoted to a particular model of context-dependent choice, the model of salient thinking introduced by Bordalo et al. (2013) and its application to models of industrial organization. We first restate the model’s main implications for consumer behavior. Thereafter, we address how a profit-maximizing firm responds to its consumers’ choice behavior being context dependent. To this end we present a streamlined model of market competition when consumers are salient thinkers, which allows us to synthesize several important implications of context-dependent choice for market outcomes that have been discussed in the literature. Furthermore, within this model we develop novel insights regarding how firms can benefit from manipulating consumers’ choice context by offering decoy goods. Finally, we survey the extant applications of the theory of salient thinking to models of industrial organization, discuss the empirical evidence in support of the theory of salient thinking, and outline avenues for future research.

Suggested Citation

  • Fabian Herweg & Daniel Müller & Philipp Weinschenk, 2018. "Salience in markets," Chapters, in: Victor J. Tremblay & Elizabeth Schroeder & Carol Horton Tremblay (ed.), Handbook of Behavioral Industrial Organization, chapter 4, pages 75-113, Edward Elgar Publishing.
  • Handle: RePEc:elg:eechap:16609_4

    Download full text from publisher

    File URL:
    Download Restriction: no


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

    Cited by:

    1. Friehe, Tim & Pham, Cat Lam, 2020. "Products liability when consumers are salient thinkers," Economics Letters, Elsevier, vol. 186(C).
    2. Clark, Derek J. & Mathisen, Terje Andreas, 2020. "Salience in a simple transport market," Research in Transportation Economics, Elsevier, vol. 82(C).

    More about this item


    Economics and Finance;


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:elg:eechap:16609_4. 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: (Darrel McCalla). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.