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Demand in the Dark

Author

Listed:
  • Steiner, Jakub
  • Stewart, Colin
  • Kocourek, Pavel

Abstract

A growing body of evidence suggests that consumers are not fully informed about prices, contrary to a critical assumption of classical consumer theory. We analyze a model in which consumer types can vary in both their preferences and their information about prices. Given data on demand and the distribution of prices, we identify the set of possible values of the consumer surplus. Each surplus in this set can be rationalized with simple information structures and preferences. We also show how to narrow down the set of values using richer datasets and provide bounds on counterfactual demands at perfectly observed prices.

Suggested Citation

  • Steiner, Jakub & Stewart, Colin & Kocourek, Pavel, 2022. "Demand in the Dark," CEPR Discussion Papers 17165, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17165
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    More about this item

    Keywords

    Consumer surplus; Price uncertainty; Information design;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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