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  • 2021
  • Working Paper

Salience

By: Pedro Bordalo, Nicola Gennaioli and Andrei Shleifer
  • Format:Print
  • | Language:English
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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 and Shleifer (2012, 2013, 2020) models of salience show how bottom up attention can distort economic choice by distracting decision makers from their immediate goals or from certain choice attributes. We show that this approach explains many puzzles: separately treated departures from “rationality” such as probability weighting, menu effects, reference point effects, and framing, emerge as distinct manifestations of the same principle of bottom up attention to salient stimuli. We highlight new predictions and discuss open conceptual questions, as well as potential applications in finance, industrial organization, advertising, and politics.

Keywords

Salience; Economic Behavior; Bottom Up Attention; Microeconomics; Decision Making; Behavior

Citation

Bordalo, Pedro, Nicola Gennaioli, and Andrei Shleifer. "Salience." NBER Working Paper Series, No. 29274, September 2021.
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About The Author

Andrei Shleifer

Negotiation, Organizations & Markets
→More Publications

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More from the Authors
  • Imagining the Future: Memory, Simulation and Beliefs By: Pedro Bordalo, Giovanni Burro, Katherine B. Coffman, Nicola Gennaioli and Andrei Shleifer
  • The Invention of Corporate Governance By: Yueran Ma and Andrei Shleifer
  • A Cognitive Theory of Reasoning and Choice By: Pedro Bordalo, Nicola Gennaioli, Giacomo Lanzani and Andrei Shleifer
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