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We introduce a new model of stochastic choice that assigns each choice
option a utility, along with a salience parameter reflecting economic frictions. We
characterize our model behaviorally and investigate its comparative statics properties.
We show that the model generates intuitive closed-form solutions in equilibrium
settings where firms can choose price, quality, and advertising. In addition, we show
that the model allows for flexible substitution patterns and changes in market shares
across choice sets. We demonstrate that our model can be easily identified and can
outperform alternatives in demand prediction.
