A First Test of Focusing Theory

Focusing theory hypothesizes a bias toward concentration according to which consumers prefer goods with one outstanding feature over those with several smaller sized upsides. In contrast to models of present-biased behavior, focusing theory prescribes also future-biased behavior if an option’s future reward is particularly outstanding. Our laboratory experiment yields substantial support for the bias toward concentration and finds both present-biased and future-biased choices as predicted by focusing theory. JEL Classification: D03, D11, D90