Salience and Consumer Choice. / Bordalo, Pedro; Gennaioli, Nicola ; Shleifer, Andrei.

In: Journal of Political Economy, Vol. 121 (5), 10.2013, p. 803-843.

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Abstract

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 more broadly, the choice context). 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 and context-dependent willingness to pay. It also suggests a novel theory of misleading sales.
Original languageEnglish
Pages (from-to)803-843
JournalJournal of Political Economy
Volume121 (5)
Publication statusPublished - Oct 2013
This open access research output is licenced under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

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