Abstract
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.
Original language | English |
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Pages (from-to) | 89-96 |
Number of pages | 8 |
Journal | Journal of Economic Behavior and Organization |
Volume | 98 |
DOIs | |
Publication status | Published - 1 Feb 2014 |
Keywords
- Add-on pricing
- Bounded rationality
- Shrouding
ASJC Scopus subject areas
- Organizational Behavior and Human Resource Management
- Economics and Econometrics