Spiegler Ran
- Published in print:
- 2011
- Published Online:
- September 2011
- ISBN:
- 9780195398717
- eISBN:
- 9780199896790
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195398717.003.0007
- Subject:
- Economics and Finance, Behavioural Economics
This chapter extends the analysis of competitive markets when consumers employ sampling-based reasoning to situations in which firms can use obfuscation strategies to create price complexity. It is ...
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This chapter extends the analysis of competitive markets when consumers employ sampling-based reasoning to situations in which firms can use obfuscation strategies to create price complexity. It is shown that greater competition increases the equilibrium use of obfuscation, without lowering expected prices, and may even create production inefficiency. Consumer protection policies that introduce simple options may be counter-productive in terms of consumer welfare.Less
This chapter extends the analysis of competitive markets when consumers employ sampling-based reasoning to situations in which firms can use obfuscation strategies to create price complexity. It is shown that greater competition increases the equilibrium use of obfuscation, without lowering expected prices, and may even create production inefficiency. Consumer protection policies that introduce simple options may be counter-productive in terms of consumer welfare.
