Targeted Information and Limited Attention

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Targeted Information and Limited AttentionAndreas Hefti and Shuo Liu * AbstractWe study targeted information in a duopoly model with differentiated products, allowing for consumers with limited attention. The presence of inattentive consumers incentivizes firms to behave as if they were mass-advertisers, despite their ability to direct their messages precisely towards consumers with the strongest preferences. We show that the scope for targeting as an efficient marketing instrument can be severely reduced, for both firms and consumers, if the standard assumption of unbounded attention capacities is dropped.A central insight of our model is that limited attention may explain the recent evidence on increased ad-blocking, which has become a key concern to the entire advertising industry. Our main findings are robust to several variations, including price and salience competition as well as varying quality of the available marketing data.

Loss leading with salient thinkers

“…Such models of “rational inattention” include Matějka and McKay (2012), Gabaix (2014), and Persson (2017). Still other articles in the field of behavioral economics have focused on the potentially biased formation of a decision‐maker's consideration set, rather than the weighting of attributes when choosing within this set (see, e.g., Ellison and Ellison, 2009; Eliaz and Spiegler, 2011; de Clippel, Eliaz, and Rozen, 2014; Hefti and Liu, 2016).…”