Noncompensatory Consideration and Compensatory Choice

an Application to Stackelberg Competition

Research output: Contribution to journalArticle

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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

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Menu
Stackelberg
Marketing strategy
Heuristics
Trade-offs
Stackelberg game
Consumer choice
Consumer marketing

Keywords

  • bounded rationality
  • compensatory
  • Stackelberg
  • Noncompensatory choice heuristics

Cite this

Noncompensatory Consideration and Compensatory Choice : an Application to Stackelberg Competition. / Papi, Mauro.

In: Economic Theory Bulletin, Vol. 2, No. 1, 04.2014, p. 53-63.

Research output: Contribution to journalArticle

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