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Competitive attention, Superstars and the Long Tail


Hefti, Andreas; Lareida, Julia (2021). Competitive attention, Superstars and the Long Tail. Working paper series / Department of Economics 383, University of Zurich.

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.

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.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:D91, D40, D43, E71, L11, M37
Uncontrolled Keywords:Attention, choice overload, consideration sets, Power Law, Superstar, Long Tail, Matthew Effect
Language:English
Date:April 2021
Deposited On:09 Apr 2021 13:16
Last Modified:09 Apr 2021 13:18
Series Name:Working paper series / Department of Economics
Number of Pages:68
ISSN:1664-705X
OA Status:Green
Official URL:https://www.econ.uzh.ch/en/research/workingpapers.html?paper-id=1065

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