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Salience and Consumer Choice

  • Pedro Bordalo
  • Nicola Gennaioli
  • Andrei Shleifer

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 (or generally, the evoked set). 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 e ects, context-dependent willingness to pay, and large shifts in demand in response to price shocks.

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Paper provided by IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 463.

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Date of creation: 2012
Date of revision:
Handle: RePEc:igi:igierp:463
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