Eliaz, Kfir and Spiegler, Ran (2006): Consideration Sets and Competitive Marketing.
Download (290kB) | Preview
We study a market model in which competing firms use costly marketing devices to influence the set of alternatives which consumers perceive as relevant. Consumers in our model are boundedly rational in the sense that they have an imperfect perception of what is relevant to their decision problem. They apply well-defined preferences to a "consideration set", which is a function of the marketing devices employed by the firms. We examine the implications of this behavioral model in the context of a competitive market model, particularly on industry profits, vertical product differentiation, the use of marketing devices and consumers' conversion rates.
|Item Type:||MPRA Paper|
|Original Title:||Consideration Sets and Competitive Marketing|
|Keywords:||consideration sets, marketing, industrial organization, advertising, default bias, inertia, product display, bounded rationality, limited attention, persuasion|
|Subjects:||D - Microeconomics > D0 - General > D03 - Behavioral Microeconomics: Underlying Principles
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C79 - Other
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets
M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M3 - Marketing and Advertising > M37 - Advertising
D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection
|Depositing User:||ran spiegler|
|Date Deposited:||18. Mar 2010 23:51|
|Last Modified:||26. Aug 2015 13:56|
Ackerberg, D. A. (2003): "Advertising, Learning, and Consumer Choice in Experience Good Markets: A Structural Empirical Examination," International Economic Review 44, 1007-40.
Alba, J.W., J.W. Hutchinson, and J.G. Lynch, Jr. (1991): "Memory and Decision Making," in H. Kassarjian and T. Robertson (Eds.) Handbook of Consumer Behavior. Englewood Cliffs, NJ: Prentice Hall, 1-49.
Bucklin, R.E. and C. Sismeiro (2003): "A Model of Web Site Browsing Behavior Estimated on Clickstream Data," Journal of Marketing Research 40, 249-267.
Butters, G. (1977): "Equilibrium Distributions of Sales and Advertising Prices," Review of Economic Studies 44, 465-491.
Bertrand, M., S. Mullainathan, E. Shafir and J. Zinman (2008): "What's Advertising Content Worth? Evidence from a Consumer Credit Marketing Field Experiment," Mimeo.
Chakravarti, A. and C. Janiszewski (2003): "The Influence of Macro-Level Motives on Consideration Set Composition in Novel Purchase Situations," Journal of Consumer Research 30, 244-258.
Chioveanu, I. (in press): "Advertising Brand Loyalty and Pricing," Games and Economic Behavior.
DellaVigna, S. and U. Malmendier (2004): "Contract Design and Self-Control: Theory and Evidence," Quarterly Journal of Economics 119, 353-402.
Dröge, C. and R.Y. Darmon (1987): "Associative Positioning Strategies through Comparative Advertising: Attribute versus Overall Similarity Approaches," Journal of Marketing Research 24, 377-388.
Eliaz, K. and R. Spiegler (2006): "Contracting with Diversely Naive Agents," Review of Economic Studies 73, 689-714.
Eliaz, K. and R. Spiegler (2008): "Consumer Optimism and Price Discrimination," Theoretical Economics 3, 459-497.
Gabaix, X. and D. Laibson (2006): "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," Quarterly Journal of Economics 121, 505-540.
Goldberg, L. (1993): "The structure of phenotypic personality traits," American Psychologist 48, 26-34.
Hoyer, W. D. (1984): "An Examination of Consumer Decision Making for a Common Repeat Purchase Product," Journal of Consumer Research 11, 822-829.
Janiszewski, C. (1993): "Preattentive mere exposure effects," Journal of Consumer Research 20, 376--392. Kotler, P. and S.J. Levy (1969): "Broadening the Concept of Marketing," Journal of Marketing 33, 10-15.
Manzini, P. and M. Mariotti (2007): "Sequentially Rationalizable Choice," American Economic Review, 97, 1824-1839.
Masatlioglu, Y. and E. Ok (2005): "Rational Choice with Status Quo Bias," Journal of Economic Theory 121, 1-29.
Masatlioglu, Y. and D. Nakajima (2008): "Choice by Constraint Elimination," Mimeo.
Masatlioglu, Y., D. Nakajima and E. Ozbay (2009): "Revealed Attention," Mimeo.
Mullainathan S., J. Schwartzstein and A. Shleifer (2008): "Coarse Thinking and Persuasion," Quarterly Journal of Economics 123, 577--619.
Nedungadi, P. (1990): "Recall and Consumer Consideration Sets: Influencing Choice without Altering Brand Evaluations," Journal of Consumer Research, 17, 263-276.
Piccione, M. and A. Rubinstein (2003): "Modeling the Economic Interaction of Agents with Diverse Abilities to Recognize Equilibrium Patterns," Journal of European Economic Association 1, 212-223.
Piccione, M. and R. Spiegler (2009): "Framing Competition," Mimeo.
Roberts, J.H. and J.M. Lattin (1997): "Consideration: Review of Research and Prospects for Future Insights," Journal of Marketing Research 34, 406-410.
Rubinstein, A. (1988): "Similarity and Decision-Making Under Risk," Journal of Economic Theory 46, 145-153.
Rubinstein, A. (1993): "On Price Recognition and Computational Complexity in a Monopolistic Model," Journal of Political Economy 101, 473-484.
Shapiro, S., D.J. MacInnis and S.E. Heckler (1997): "The effects of incidental ad exposure on the formation of consideration sets," Journal of Consumer Research 24, 94--104.
Salant, Y. and A. Rubinstein (2008): "(A,f): Choices with Frames," Review of Economic Studies 75, 1287-1296.
Shum, M. (2004): "Does Advertising Overcome Brand Loyalty? Evidence from the Breakfast-Cereals Market," Journal of Economics and Management Strategy, 13, 241-272.
Shapiro, J. (2006): "A `Memory-Jamming' Theory of Advertising," Mimeo, University of Chicago.
Spiegler, R. (2005): "The Market for Quacks," Review of Economic Studies 73, 1113-1131.
Spiegler R. (2006): "Competition over Agents with Boundedly Rational Expectations," Theoretical Economics 1, 207-231.
Warner, M. (2006): "Salads or No, Cheap Burgers Revive McDonald's," New York Times, April 19.
Varian, H. (1980): "A model of sales," American Economic Review 70, 651-659.
Yehezkel, Y. (2009): "Slotting Allowances and Information Gathering," Mimeo, Tel Aviv University.
Zhang, S. and A.B. Markman (1998): "Overcoming the Early Entrant Advantage: The Role of Alignable and Nonalignable Differences," Journal of Marketing Research, 35, 413-426.