Memory, Attention and Choice

Bordalo, Pedro, Gennaioli, Nicola and Shleifer, Andrei (2015) Memory, Attention and Choice. Working Paper.


We present a theory of consumer choice that combines elements of limited recall and of allocation of attention distorted by salience. The theory helps clarify and organize a variety of evidence dealing with consumer reaction to information, including surprises in quality and prices, unshrouding of hidden attributes such as taxes or maintenance costs, and reminders. Our model explains how consumers under or overreact to information, depending on what draws their attention. It also yields a normative analysis of reaction to reminders which adjusts the "sufficient statistic" methodology.

Item Type: Other Working Paper
Keywords: finance
Subject(s): Finance
Date Deposited: 11 Jul 2016 14:01
Last Modified: 22 Feb 2017 18:24
Funders: not applicable

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