Consumer myopia, competition and the incentives to unshroud add-on information

Tobias Wenzel

Research output: Contribution to journalArticle

7 Citations (Scopus)
125 Downloads (Pure)

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 languageEnglish
Pages (from-to)89-96
Number of pages8
JournalJournal of Economic Behavior and Organization
Volume98
DOIs
Publication statusPublished - 1 Feb 2014

Keywords

  • Add-on pricing
  • Bounded rationality
  • Shrouding

ASJC Scopus subject areas

  • Organizational Behavior and Human Resource Management
  • Economics and Econometrics

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