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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 effects, context-dependent willingness to pay, and large shifts in demand in response to price shocks.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1252.

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Date of creation: Apr 2010
Date of revision: May 2012
Handle: RePEc:upf:upfgen:1252
Contact details of provider: Web page: http://www.econ.upf.edu/

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