Salience and Consumer Choice

By P. Bordalo, N. Gennaioli, A. Shleifer. Journal of Political Economy, 2013

908 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, General Decision Sciences, Safety Research

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Citations in the corpus

Something in the Air: Pollution and the Demand for Health Insurance (2018, background): “See Bordalo et al. (2013, 2014); Koszegi and Szeidl (2013); Bushong et al. (2016) for recent formalizations.”
Preference purification and the inner rational agent: a critique of the conventional wisdom of behavioural welfare economics (2016, methodology): “The use of behavioural optimisation models to purify preferences was discussed in Section 2, where it was exemplified by the work of Bleichrodt et al. (‘BPW’, 2001), Kőszegi and Rabin (2007, 2008) and Bordalo et al. (2013).”
Learning Through Noticing: Theory and Evidence from a Field Experiment (2014, methodology): “For more recent approaches to modeling limited attention in economic settings, see Sims (2003), Bordalo, Gennaioli, and Shleifer (2012, 2013), Koszegi and Szeidl (2013), and Gabaix (2013). nloaded from https://academ ic.oup.com /qje/article-abstract/129/3/1311/1817927 by U niversity of C hicago…”
The Impact of Salience on Investor Behavior: Evidence from a Natural Experiment (2019, background): “In a corporate finance theoretical models in which the choice set shapes a decision-maker’s attention (Bordalo, Gennaioli, and Shleifer 2012; 2013a; 2013b; Koszegi and Szeidl 2013; Bushong, Rabin, Schwartzstein 2017).”
Advertising Expensive Mortgages (2016, background): “For example, Gabaix and Laibson (2006) and Bordalo, Gennaioli, and Shleifer (2013) show how consumers focus on salient product features, especially if they are financially less literate.25 Our findings are consistent with their evidence since we find a larger effect of advertising on mortgage…”
The Psychological Effect of Weather on Car Purchases (2015, background): “The idea of salience is not new in the psychology literature, but it has been formalized and received renewed attention in the past few years (see, for example, Bordalo, Gennaioli, and Shleifer 2012, 2013; Koszegi and Szeidl 2013).20 20.”
Optimal Taxation with Behavioral Agents (2020, neutral): “59Hence, normatively irrelevant tax rates may affect choices, a bit like in the behavioral literature on menu and decoy effects (e.g., Kamenica (2008), Bordalo et al. (2013), Bushong et al. (2016) ).”
A Review of Nudges: Definitions, Justifications, Effectiveness (2020, positive): “On the other hand, the effectiveness of this policy can also be explained by incorporating cognitive biases into the picture, namely, loss aversion (Kahneman & Tversky, 1979) and a salience effect (Bordalo et al., 2013).”
Random Choice and Learning (2019, background): “10 Many existing explanations of context-dependent choice—see, e.g., Tversky and Simonson (1993), de Clippel and Eliaz (2012), and Bordalo, Gennaioli, and Shleifer (2013)—describe a psychological mechanism through which the objectives of the decision maker are influenced by the set of available…”
Why Do Individual Investors Disregard Accounting Information? The Roles of Information Awareness and Acquisition Costs (2018, neutral): “Bordalo et al. (2012, 2013a, 2013b) operationalize salience by focusing on magnitudes, with more extreme magnitudes being more salient. modify (2) to examine whether extreme earnings surprises motivate investors to use earnings news.”
Inattentive Valuation and Reference-Dependent Choice ∗ (2012, methodology): “Each panel plots (with triangles) the fraction of correct responses as a function of the location around the circle (indicated on the horizontal axis) for one of the four subjects.(6) In Figure 1, the probabilities of appearance at each”