Focus, Then Compare

49 Pages Posted: 27 Dec 2018 Last revised: 5 Dec 2019

See all articles by Doron Ravid

Doron Ravid

University of Chicago - Department of Economics

Kai Steverson

New York University (NYU)

Date Written: March 2, 2019

Abstract

We study the following random choice procedure. First, the agent focuses on an option at random from the set of available options. Then, she compares the focal option to each other available alternative. Comparisons are binary, random and independent of each other. The agent chooses the focal option if it passes all comparisons favorably. Otherwise, the agent draws a new focal option with replacement. We characterize the procedure's revealed preference implications, show that it accommodates the Attraction effect and Choice overload, and discuss how to conduct welfare comparisons. We conclude by showing that while utility maximization is the procedure's unique deterministic special case, nearly deterministic versions of the procedure can exhibit context effects.

Keywords: focus then compare, random choice, choice overload, attraction effect, attention, random utility

JEL Classification: D01, D11

Suggested Citation

Ravid, Doron and Steverson, Kai, Focus, Then Compare (March 2, 2019). Available at SSRN: https://ssrn.com/abstract=3299160 or http://dx.doi.org/10.2139/ssrn.3299160

Doron Ravid (Contact Author)

University of Chicago - Department of Economics ( email )

1126 E. 59th St
Chicago, IL 60637
United States

Kai Steverson

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
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New York, NY 10003-711
United States

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