Noncompensatory consideration and compensatory choice: an application to Stackelberg competition

Mauro Papi ()
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Mauro Papi: University of Aberdeen

Economic Theory Bulletin, 2014, vol. 2, issue 1, No 6, 53-63

Abstract: 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.

Keywords: Bounded rationality; Compensatory; Noncompensatory choice heuristics; Stackelberg (search for similar items in EconPapers)
JEL-codes: D00 L00 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (9)

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DOI: 10.1007/s40505-013-0026-0

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