Salience effects in economic choice

• Applicant: Professor Dr. Markus Dertwinkel-Kalt
• Subject Area: Economic Theory
• Term: from 2018 to 2021
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 404416232

Psychological evidence implies that a decision maker’s attention is limited and therefore guided to choice aspects that stand out in the choice context. Two closely related models build on this finding and model how limited attention impacts on economic decisions. These models build on the central assumption that is denoted as the contrast effect: Accordingly, a choice aspect (for instance, price) is the more salient the more the available alternatives differ with respect to this aspect, that is, the higher the contrast across the alternatives with respect to this choice aspect is. In this project I want to experimentally investigate the implications of the contrast effect on economic decision making. In three subprojects I want to investigate how the contrast effect impacts on intertemporal decisions, how it impacts on choice under risk, and which aspects of a choice context determine the choice-relevant contrast. Thereby, this project belongs to the field of Behavioral Economics and uses experimental methods.

• DFG Programme: Research Grants