Market demand of smart but uninformed consumers rotates counterclockwise with better information: surprising welfare effects

Tarcisio da Gra �a and Robert Masson

Applied Economics Letters, 2016, vol. 23, issue 1, 11-14

Abstract: Providing truthful and unbiased information about the true value of a good to a priori heterogeneous consumers generates a mean-preserving counterclockwise rotation of demand. The welfare analysis of such rotation in monopoly and perfectly competitive models indicates that consumers can lose surplus if they become better informed.

Date: 2016
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DOI: 10.1080/13504851.2015.1044642

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