THE COST OF INACCURATE AUTOMOBILE MILEAGE INFORMATION

Benjamin Sexauer, Terry Roe and Jean D. Kinsey
Authors registered in the RePEc Author Service: Benjamin H. Senauer ()

No 14056, Staff Papers from University of Minnesota, Department of Applied Economics

Abstract: The model in this paper integrates the possibility of misinformation into consumer utility theory. If the utility realized from a good differs from the utility anticipated at time of purchase, shifts in demand would occur, and thus changes in consumer surplus. These changes provide a measure of the cost of misinformation or value of improved information. The empirical analysis yields estimates of the private and social cost of inaccuracies in automobile buyers; pre-purchase mileage estimates. If automobile purchases are based on imperfect gasoline mileage information, a discrepancy results between expected and actual fuel-efficiency. The data source is a survey of 1980 model car buyers conducted by the authors.

Keywords: Consumer/Household; Economics (search for similar items in EconPapers)
Pages: 30
Date: 1981
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Persistent link: https://EconPapers.repec.org/RePEc:ags:umaesp:14056

DOI: 10.22004/ag.econ.14056

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