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

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  • Wenzel, Tobias
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    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.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

    Volume (Year): 98 (2014)
    Issue (Month): C ()
    Pages: 89-96

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    Handle: RePEc:eee:jeborg:v:98:y:2014:i:c:p:89-96

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    Web page: http://www.elsevier.com/locate/jebo

    Related research

    Keywords: Bounded rationality; Add-on pricing; Shrouding;

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