Consideration Sets and Competitive Marketing

Kfir Eliaz and Ran Spiegler

MPRA Paper from University Library of Munich, Germany

Abstract: 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.

Keywords: consideration sets; marketing; industrial organization; advertising; default bias; inertia; product display; bounded rationality; limited attention; persuasion (search for similar items in EconPapers)
JEL-codes: C79 D03 D43 L13 M37 (search for similar items in EconPapers)
Date: 2006-06-05, Revised 2009-09-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Consideration Sets and Competitive Marketing (2011)
Working Paper: Consideration Sets and Competitive Marketing (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:21434

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