Attention and Saliency on the Internet: Evidence from an Online Recommendation System

55 Pages Posted: 16 Nov 2015

See all articles by Christian Helmers

Christian Helmers

Santa Clara University

Pramila Krishnan

University of Oxford - Department of Economics

Manasa Patnam

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Date Written: November 2015

Abstract

Using high-frequency transaction-level data from an online retail store, we examine whether consumer choices on the internet are consistent with models of limited attention. We test whether consumers are more likely to buy products that receive a saliency shock when they are recommended by new products. To identify the saliency effect, we rely on i) the timing of new product arrivals, ii) the fact that new products are per se highly salient upon arrival, drawing more attention and iii) regional variation in the composition of recommendation sets. We find a sharp and robust 6% increase in the aggregate sales of existing products after they are recommended by a new product. To structurally disentangle the effect of saliency on a consumer's consideration and choice decision, we use data on individual transactions to estimate a probabilistic choice set model. We find that the saliency effect is driven largely by an expansion of consumers' consideration sets.

Keywords: advertising, limited attention, online markets

JEL Classification: D22, K11, M30, O34

Suggested Citation

Helmers, Christian and Krishnan, Pramila and Patnam, Manasa, Attention and Saliency on the Internet: Evidence from an Online Recommendation System (November 2015). CEPR Discussion Paper No. DP10939, Available at SSRN: https://ssrn.com/abstract=2691544

Christian Helmers (Contact Author)

Santa Clara University ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States

Pramila Krishnan

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

Manasa Patnam

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

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