Strategic obfuscation and consumer protection policy in financial markets: Theory and experimental evidence

Yiquan Gu and Tobias Wenzel

No 76, DICE Discussion Papers from Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: This paper studies obfuscation decisions by firms in retail financial markets theoretically and experimentally. We show that more prominent firms are more likely to obfuscate. While prominent firms always choose maximum obfuscation, the obfuscation by less prominent firms depends on the degree of asymmetry in prominence and consumer protection policy. We evaluate the impact of a consumer protection policy that limits the scope of obfuscation. We show that such a policy may not be effective as less prominent firms may increase their obfuscation practice.

Keywords: Obfuscation; Financial markets; Consumer protection; Experiment (search for similar items in EconPapers)
JEL-codes: C92 D14 D18 G20 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Strategic Obfuscation and Consumer Protection Policy in Financial Markets: Theory and Experimental Evidence (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:76

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