Noncompensatory Consideration and Compensatory Choice: an Application to Stackelberg Competition

Research output: Contribution to journalArticle

3 Downloads (Pure)

Abstract

Unlike standard models of choice, experimental evidence suggests that individuals avoid tradeoffs when choice problems are complex. I analyze the implications of consumers using noncompensatory choice heuristics in a simple Stackelberg game in which firms offer menus of multi-attribute alternatives and influence the attribute considered to be salient by consumers via marketing. I illustrate that there is a tight link between optimal menu design and marketing strategies in equilibrium and briefly discuss the choice-theoretic properties of the consumer's choice procedure.
Original languageEnglish
Pages (from-to)53-63
Number of pages11
JournalEconomic Theory Bulletin
Volume2
Issue number1
Early online date7 Jan 2014
DOIs
Publication statusPublished - Apr 2014

Keywords

  • bounded rationality
  • compensatory
  • Stackelberg
  • Noncompensatory choice heuristics

Fingerprint Dive into the research topics of 'Noncompensatory Consideration and Compensatory Choice: an Application to Stackelberg Competition'. Together they form a unique fingerprint.

Cite this