Memory, Attention, and Choice


Bordalo, Pedro, Nicola Gennaioli, and Andrei Shleifer. Working Paper. “Memory, Attention, and Choice”.


We present a theory of consumer choice that combines elements of limited recall and of allocation
of attention distorted by salience. The theory helps clarify and organize a variety of evidence dealing
with consumer reaction to information, including surprises in quality and prices, unshrouding of
hidden attributes such as taxes or maintenance costs, and reminders. Our model explains how
consumers under or overreact to information, depending on what draws their attention. It also yields
a normative analysis of reaction to reminders which adjusts the \sucient statistic" methodology.

Last updated on 03/09/2017