Working Paper: NBER ID: w18820
Authors: Meghan R. Busse; Nicola Lacetera; Devin G. Pope; Jorge Silvarisso; Justin R. Sydnor
Abstract: We investigate whether the first digit of an odometer reading is more salient to consumers than subsequent digits. We find that retail transaction prices and volumes of used vehicles drop discontinuously at 10,000-mile odometer thresholds, echoing effects found in the wholesale market by Lacetera, Pope and Sydnor (2012). Our results reveal that retail consumers devote limited attention to evaluating vehicle mileage, and that this drives effects in the wholesale market. We estimate the inattention parameter implied by the price discontinuities. In addition, our results suggest that estimating consumer-level structural parameters using data from an intermediate market can give misleading results.
Keywords: No keywords provided
JEL Codes: D03; D12; L0; L62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Odometer readings (Y10) | Retail transaction prices (L81) |
| Consumer inattention (D19) | Retail transaction prices (L81) |
| Odometer readings (Y10) | Consumer perceptions of vehicle value (D46) |
| Retail transaction prices (L81) | Consumer perceptions of vehicle value (D46) |