We present a generally applicable theory of focusing based on the hypothesis that a person
focuses more on, and hence overweights, attributes in which her options differ more. Our model
predicts that the decisionmaker is too prone to choose options with concentrated advantages
relative to alternatives, but maximizes utility when the advantages and disadvantages of alternatives
are equally concentrated. In intertemporal choice, because the relative concentrations
of an option’s costs and benefits can be different from the perspective of a single period and the
perspective of the entire choice problem, the decisionmaker often exhibits a form of time inconsistency.
She is present-biased when the costs of current misbehavior are distributed over many
future dates (such as in harmful consumption), but ‘future-biased’ when the benefit of many
periods’ effort is concentrated in a single goal (such as in career advancement). In a market
setting, a profit-maximizing firm selling to a consumer with focus-dependent behavior chooses
a product with one core attribute, and splits its price into multiple components. A strong firm
wants to be especially strong on its competitor’s weak attribute, while a weak firm wants to be
relatively strong on its competitor’s strong attribute.