Strategic Obfuscation and Consumer Protection Policy in Financial Markets: Theory and Experimental Evidence

Yiquan Gu and Tobias Wenzel
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Tobias Wenzel: Dusseldorf Institute for Competition Economics (DICE), University of Dusseldorf

No 2012-14, Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK.

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: 2012-12-01
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Citations: View citations in EconPapers (3)

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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:uea:ueaccp:2012_14

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