Three Essays On The Implications Of Limited Attention In Economics

Author : Matthew Francis McGranaghan
Publisher :
ISBN 13 :
Total Pages : 158 pages
Book Rating : 4.:/5 (124 download)

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Download or read book Essays on the Economics of Attention written by Matthew Francis McGranaghan and published by . This book was released on 2020 with total page 158 pages. Available in PDF, EPUB and Kindle. Book excerpt: Media has become increasingly abundant and accessible. Due to the wealth of competing provides, consumer attention is an important limiting factor in information consumption. Since attention is uniquely scarce - one cannot buy more time - there may be far-reaching economic implications of changing how consumers allocate their attention. This dissertation is composed of three chapters, each analyzing a different consequence of consumer attention constraints. Broadly, the three chapters focus on: Measuring engagement spillovers that result from consumer attention cascades; understanding how promotional messages can affect attention paid to different spending categories; and investigating the implications of having more granular measurements of attention to advertising as well as studying how attention can be influenced by advertising content. The first chapter explores the importance of consumer attention in a context where consumers are choosing one or more coupons from a large set. Price promotions are typically offered in groups on websites, mailings and circulars, but little is known about how promotional offers in near proximity affect each other. Across two large-scale field experiments conducted on a multi-brand coupon website, we find that when lead promotions offer high-value deals, consumers are more likely to print subsequent offers, a finding we call a "lead offer spillover." Additional analyses and experiments indicate that larger lead offers increase consumer search for subsequent offers rather than changing evaluative judgments or generating complementarities between lead and subsequent offers. This highlights the importance to firms of attracting attention in the first place, as there can be positive downstream effects. The second chapter investigates how specific promotional messages can influence how consumers allocate their attention. We find that framing a savings message as benefiting the baby (i.e., Save "For Your Baby") significantly increases coupon printing. This framing effect is equivalent to an incremental $0.05 of coupon value and is larger than the effect of a traditional call to action (i.e., "Act Now"). Additional studies suggest the effect is primarily driven by mental accounting. Specifically, the beneficiary frame increases the likelihood an offer is coded as belonging to a particular budget category. The results suggest a novel, low cost pathway for marketers to increase promotion uptake. Focusing consumer attention on specific attributes or people in their lives can have important implications for marketing effectiveness. The concluding chapter addresses the challenge of measuring and maintaining viewer attention from the perspective of a TV broadcaster. Instant access to social media, news, and work has raised the opportunity cost of engaging with TV ads. The result may be a significant difference between traditional engagement measures, e.g., TV tuning, and measures which can capture more nuanced behaviors. This third chapter asks two questions relating to viewer behavior in the context of TV advertising. First, how do traditional TV audience measurement metrics relate to a novel set of viewer measures that may be more aligned with broadcasters' and advertisers' interests? Second, what is the relationship between these new measures and advertising content? To answer these questions, we leverage novel, in-situ, audience measurement data that use facial- and body-recognition technology to track tuning, presence (in room behavior), and attention for a panel of several thousand viewers and millions of ad impressions. We consider four different classifications of advertising content based on human and machine-coded features. We find meaningful differences in the absolute levels and dynamics of these behaviors, and can identify ad content for which viewers are systematically more likely to change the channel, leave the room, and stop paying attention. Such ads reduce the pool of attentionn to subsequent advertisers as well as to the platform itself, creating a negative externality. We quantify these spillover effects requiring advertisers to improve their content can result in significant increases in the cumulative levels of viewer tuning, in-room presence, and attention. Attention has historically been hard to measure, but that is rapidly changing. Browsers track what consumers are looking at on the web, while a multitude of devices (e.g. cell phones, TVs, and watches) can track how consumers are spending their time in real world, sometimes even linking acrions across the physical and digital domains. This dissertation leverages novel sources of data to investigate the importance of understanding how consumers allocate their attention. It provides evidence for positive benefits from grabbing attention in the multi-product choice context of online coupons; it describes the benefits of getting consumers to pay attention to the direct benefactor of their purchases; and it investigates the implications of better attention measurement in the context of TV advertising.