Consumer inference and the regulation of consumer information

Steven Schmeiser

International Journal of Industrial Organization, 2014, vol. 37, issue C, 192-200

Abstract: When consumers are uncertain about the importance of a product attribute, mandatory disclosures have two effects: directly communicating attributes, and an inferential effect that changes how much weight consumers put on product attributes. I model a signaling game between regulators and consumers in which regulators perfectly reveal their private information about the importance of an attribute through the intensive margin of regulation. The model has empirical predictions that distinguish it from traditional models of mandatory disclosure. I also examine inferential mistakes that can lead to over or under-regulation and consumer over or under-estimates of the importance of product attributes.

Keywords: Regulation; Mandatory disclosures; Consumer inference (search for similar items in EconPapers)
JEL-codes: D83 K20 L51 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:37:y:2014:i:c:p:192-200

DOI: 10.1016/j.ijindorg.2014.09.004

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