Consumer myopia, competition and the incentives to unshroud add-on information

This paper studies unshrouding decisions in a framework similar to Gabaix and Laibson (2006), but considers an alternative unshrouding mechanism where the impact of advertising add-on information depends on the number of unshrouding firms. We show that shrouding becomes less prevalent as the number of competing firms increases. With unshrouding costs a non-monotonic relationship between the number of firms and unshrouding may arise.

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Year of publication:	2013
Authors:	Wenzel, Tobias
Publisher:	Düsseldorf : Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
Subject:	Bounded rationality \| Add-on pricing \| Shrouding

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Series:	DICE Discussion Paper ; 126
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
ISBN:	978-3-86304-125-0
Other identifiers:	775120472 [GVK] hdl:10419/88627 [Handle] RePEc:zbw:dicedp:126 [RePEc]
Classification:	D40 - Market Structure and Pricing. General ; D80 - Information and Uncertainty. General ; L10 - Market Structure, Firm Strategy, and Market Performance. General
Source:	EconStor

Persistent link: https://www.econbiz.de/10010327638