CeDEx workshop - Chris Tyson (Queen Mary, University of London)

Two-stage choice models: Theory and applications to advertising competition

We investigate two-stage models of choice that allow attention, consideration, or salience effects to impact choice behavior either before or after the decision maker maximizes (or attempts to maximize) his preferences. Firstly, these models are characterized axiomatically to determine their behavioral content. And secondly, they are used as the basis for incorporating informative or non-informative advertising into the analysis of oligopolistic price competition with differentiated products.