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.
|Number of pages||11|
|Journal||Economic Theory Bulletin|
|Early online date||7 Jan 2014|
|Publication status||Published - Apr 2014|
- bounded rationality
- Noncompensatory choice heuristics