What do Consumers Consider Before They Choose? Identification from Asymmetric Demand Responses

Abstract Consideration set models generalize discrete-choice by relaxing the assumption that consumers consider all available options. Determining which options were considered has previously required either survey data or restrictions on how attributes affect consideration utility. We provide an alternative route. In full-consideration models, choice probabilities satisfy a symmetry property analogous to Slutsky in continuous-choice models. This breaks down when changes characteristics perturb consideration. show are constructively identified from resulting asymmetries. validate our approach lab experiment where sets known and then apply framework study “smart default” policy Medicare Part D, wherein automatically reassigned lower-cost prescription drug plans with option of opting out. Full-consideration imply such will be ineffective because opt out avoid switching costs. Allowing for inattention, we find defaulting produces negligible welfare benefits average, but only who would save at least $300 large benefits.