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Competitive attention, Superstars and the Long Tail

Author

Listed:
  • Andreas Hefti
  • Julia Lareida
Abstract
We propose a model of competitive attention based on two key premises: i) People have limited information processing capacities and ii) consideration sets are formed according to relative salience. The equilibrium predictions we obtain can help to understand, and connect, diverse empirical phenomena, such as the Paradox of Choices, the Power Law dispersions of key market data (sales, profits, online clicks,...), the relation between advertising expenditures and market shares, the evolution of market inequality, or why evidence favoring a “Long Tail” effect is mixed at best.

Suggested Citation

  • Andreas Hefti & Julia Lareida, 2021. "Competitive attention, Superstars and the Long Tail," ECON - Working Papers 383, Department of Economics - University of Zurich.
    • Handle: RePEc:zur:econwp:383
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    File URL: https://www.zora.uzh.ch/id/eprint/202542/1/econwp383.pdf
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    References listed on IDEAS

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    Cited by:

    1. Andreas Hefti & Julian Teichgräber, 2021. "Inequality in models with a competition for market shares," ECON - Working Papers 375, Department of Economics - University of Zurich.

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    More about this item

    Keywords

    Attention; choice overload; consideration sets; Power Law; Superstar; Long Tail; Matthew Effect;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • E71 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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