Focus, Then Compare

Abstract

We study the following random choice procedure. First, the agent focuses on an option at random from the set of available options. Then, she compares the focal option to each other available alternative. Comparisons are binary, random and independent of each other. The agent chooses the focal option if it passes all comparisons favorably. Otherwise, the agent draws a new focal option with replacement. We characterize the procedure's revealed preference implications, show that it accommodates the Attraction effect and Choice overload, and discuss how to conduct welfare comparisons. We conclude by showing that while utility maximization is the procedure's unique deterministic special case, nearly deterministic versions of the procedure can exhibit context effects.

Keywords: focus then compare, random choice, choice overload, attraction effect, attention, random utility

JEL Classification: D01, D11