Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129973
Authors: 
Dertwinkel-Kalt, Markus
Köhler, Katrin
Lange, Mirjam R. J.
Wenzel, Tobias
Year of Publication: 
2016
Series/Report no.: 
DICE Discussion Paper 216
Abstract: 
We conduct a laboratory experiment that tests two fundamental predictions unique to salience theory. If an agent purchases one of two vertically differentiated products, salience theory makes the following two distinct predictions. First, it hypothesizes that a higher expected price level for both products shifts demand toward the more expensive, high-quality product. Second, it predicts that demand for the high-quality product is larger if the price level is expectedly high than if it is unexpectedly high. In our experiment, subjects purchased fast or slow internet access at different price levels. Our results strongly support both predictions of salience theory.
Subjects: 
salience theory
attention
relative thinking
JEL: 
D03
ISBN: 
978-3-86304-215-8
Document Type: 
Working Paper

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