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

Tobias Wenzel

Journal of Economic Behavior & Organization, 2014, vol. 98, issue C, 89-96

Abstract: 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.

Keywords: Bounded rationality; Add-on pricing; Shrouding (search for similar items in EconPapers)
JEL-codes: D40 D80 L10 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:98:y:2014:i:c:p:89-96

DOI: 10.1016/j.jebo.2013.12.002

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