Salience

Andrei Shleifer, Nicola Gennaioli () and Pedro Bordalo
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Nicola Gennaioli: Finance Department, Bocconi University, Milan, Italy
Pedro Bordalo: Said Business School, Oxford University, Oxford, United Kingdom

Annual Review of Economics, 2022, vol. 14, issue 1, 521-544

Abstract: We review the fast-growing work on salience and economic behavior. Psychological research shows that salient stimuli attract human attention bottom up due to their high contrast with surroundings, their surprising nature relative to recalled experiences, or their prominence. The Bordalo, Gennaioli & Shleifer (2012, 2013b, 2020) models of salience show how bottom-up attention can distort economic choice by distracting decision makers from their immediate goals or from relevant choice attributes. This approach unifies probability weighting, menu effects, reference points, and framing as distinct manifestations of bottom-up attention. We highlight new predictions and discuss open conceptual questions, as well as potential applications in finance, industrial organization, advertising, and politics.

Keywords: attention; memory; reminders; risky choice (search for similar items in EconPapers)
JEL-codes: D01 D91 G41 (search for similar items in EconPapers)
Date: 2022
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https://doi.org/10.1146/annurev-economics-051520-011616
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Working Paper: Salience (2021)
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DOI: 10.1146/annurev-economics-051520-011616

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