Competitive Framing

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. (JEL D43, D82, M31)

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