American Economic Journal: Microeconomics: Vol. 6 No. 3 (August 2014)

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Competitive Framing

Article Citation

Spiegler, Ran. 2014. "Competitive Framing." American Economic Journal: Microeconomics, 6(3): 35-58.

DOI: 10.1257/mic.6.3.35

Abstract

I present a simple framework for modeling two-firm market competition when consumer choice is "frame-dependent", and firms use costless "marketing messages" to influence the consumer's frame. This framework embeds several recent models in the "behavioral industrial organization" literature. I identify a property that consumer choice may satisfy, which extends the concept of Weighted Regularity due to Piccione and Spiegler (2012), and provide a characterization of Nash equilibria under this property. I use this result to analyze the equilibrium interplay between competition and framing in a variety of applications.

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Authors

Spiegler, Ran (Tel Aviv U and U College London)

JEL Classifications

D43: Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection
D82: Asymmetric and Private Information; Mechanism Design
M31: Marketing

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