Selective Attention and Economic Decisions

People often “look the other way” when it comes to the consequences that their choices have for others, a phenomenon called willful ignorance or selective attention. This research investigates the relation between selective attention and ethical behavior in two important economic contexts: markets for ethical products and the formation of social norms of sustainable consumption. Combining economic theory with rigorous experimental tests, I address the following research questions: When do people ignore information that the products they consume are harming the environment or other people? How does such selective attention impact demand? How does selective attention impede the development of social norms regarding sustainable consumption? What can policy makers do to steer attention to ethical problems and promote the public good? In answering these questions, the research develops a new account of belief formation based on motivated cognition. Motivated cognition refers to the fact that people either consciously or subconsciously manipulate their beliefs to achieve motivational, affective or strategic goals. While decades of psychological research have demonstrated the importance of this phenomenon, we know very little about its impact on market outcomes or collective action. By modeling the bi-directional influences between the economic environment and human psychology, this research explains the inextricable links between the two. On the empirical side, this investigation will generate the first rigorous evidence of the role of selective attention in markets and in the formation of social norms. Online experiments with real consumers show how selective attention affects demand for sustainable products, and inform the design of campaigns to increase sustainable consumption. By elucidating the psychological foundations of ethical economic behavior, this research yields crucial insights for policy makers interested in promoting social change.