Slot allocation: A model of competition between firms when consumers are procedurally rational

We present a simple model of competition between firms who face boundedly rational consumers. The consumers cannot compare two consumption bundles; instead, they have some fundamental preferences and a selection procedure. In any Nash equilibrium of the slot allocation game, the firms choose the same allocation. Then may be multiple equilibria, one of which is always to allocate according to the consumers' tastes. Finally, as the number of firms increases, only the allocation preferred by the consumers remains as an equilibrium, which may not maximise the industry profit. (C) 1999 Elsevier Science B.V. All rights reserved. JEL classification: C72; D11; D21; L10.