Can labeling and information policies harm consumers?

Information and labeling are popular food policy instruments because of their presumedpositive influence on consumer welfare. In a one-good case with unlimited attention, we showconsumer welfare is always improved with the provision of accurate information. However, ina two-good case with limited attention, we show that consumer welfare is not always improvedwith the provision of accurate information. When attention is constrained, welfare may fall withinformation provision policies irrespective of their costs. The results suggest information andlabeling polices may sometimes be counterproductive when attention is limited.