Strategic Product Disclosure and Obfuscation in the Coffee Market under Rational Inattention

Stefano Castriota, Luigi Palumbo, Fernando Payró Chew and Amedeo Piolatto

No 1609, Working Papers from Barcelona School of Economics

Abstract: Measuring strategic obfuscation is challenging because firms deliberately conceal quality from researchers and consumers. We investigate how informational frictions generate pricing power using data on 145 ground coffee products from Italian supermarkets, where Arabica content is selectively disclosed or obfuscated. To overcome unobservability, we utilise a theoretical model of consumer rational inattention as empirical scaffolding. The framework predicts a threshold equilibrium: high-quality firms disclose attributes to capture a price premium, whilst lower-quality firms obfuscate to benefit from market pooling. Empirical results confirm selective disclosure, demonstrating how firms actively exploit consumer frictions to protect markups.

Keywords: Arabica vs. Robusta pricing; information acquisition costs; rational inattention; selective disclosure thresholds; Shannon entropy in consumer choice (search for similar items in EconPapers)
JEL-codes: D83 L13 L15 (search for similar items in EconPapers)
Date: 2026-10
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