Consumer myopia, competition and the incentives to unshroud add-on information
No 126, DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
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)
New Economics Papers: this item is included in nep-com and nep-mkt
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Journal Article: Consumer myopia, competition and the incentives to unshroud add-on information (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:126
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