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
Institutions:	Düsseldorf Institute for Competition Economics (DICE), Wirtschaftswissenschaftliche Fakultät
Subject:	Bounded rationality \| Add-on pricing \| Shrouding

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Extent:	application/pdf
Series:	DICE Discussion Papers. - ISSN 2190-9938.
Type of publication:	Book / Working Paper
Notes:	Number 126
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/10010956770