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:	2014
Authors:	Wenzel, Tobias
Published in:	Journal of Economic Behavior & Organization. - Elsevier, ISSN 0167-2681. - Vol. 98.2014, C, p. 89-96
Publisher:	Elsevier
Subject:	Bounded rationality \| Add-on pricing \| Shrouding

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Type of publication:	Article
Classification:	D40 - Market Structure and Pricing. General ; D80 - Information and Uncertainty. General ; L10 - Market Structure, Firm Strategy, and Market Performance. General
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010743940