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Targeted information and limited attention

Author

Listed:
  • Andreas Hefti
  • Shuo Liu

Abstract

We examine the implications of limited consumer attention for the targeting decisions of competing firms. Limited attention alters the strategic role of information provision as firms may become incentivized to behave as mass advertisers, despite perfect targeting abilities. We analyze the consequences of limited attention for targeting, strategic pricing, market shares, attention competition between firms, and the value of marketing data to firms. Accounting for limited attention in an otherwise standard targeting framework can explain several recent key issues from the advertising industry, such as consumer-side information overload or the increased usage of ad blocking tools.

Suggested Citation

  • Andreas Hefti & Shuo Liu, 2016. "Targeted information and limited attention," ECON - Working Papers 230, Department of Economics - University of Zurich, revised Dec 2019.
    • Handle: RePEc:zur:econwp:230
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    File URL: https://www.zora.uzh.ch/id/eprint/124916/13/econwp230.pdf
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    References listed on IDEAS

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    Cited by:

    1. Andreas Hefti, 2016. "Distributional comparative statics with heterogeneous agents," ECON - Working Papers 237, Department of Economics - University of Zurich.
    2. 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

    Targeted advertising; limited attention; ad avoidance; salience competition; privacy concerns;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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