Replication data for: Heuristic Thinking and Limited Attention in the Car Market

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Project Citation:

Lacetera, Nicola, Pope, Devin G., and Sydnor, Justin R. Replication data for: Heuristic Thinking and Limited Attention in the Car Market. Nashville, TN: American Economic Association [publisher], 2012. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-11. https://doi.org/10.3886/E112546V1

Project Description

Summary: Can heuristic information processing affect important product markets? Analyzing over 22 million wholesale used-car transactions, we find evidence of left-digit bias in the processing of odometer values, whereby individuals focus on the number's leftmost digits. The bias leads to discontinuous drops in sale prices at 10,000-mile odometer thresholds, along with smaller drops at 1,000-mile thresholds. These findings reveal that information-processing heuristics matter even in markets with large stakes and easily observed information. We model left-digit bias in an inattention framework and structurally estimate the inattention parameter. Empirical patterns suggest the results are driven by final customers rather than professional agents. (JEL D12, D44, D83, L81)

Scope of Project

JEL Classification:
      D12 Consumer Economics: Empirical Analysis
      D44 Auctions
      D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
      L81 Retail and Wholesale Trade; e-Commerce

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Published Versions

V1 [2019-10-11]

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