Download This PaperInforming Consumers About Themselves
27 Pages Posted: 25 Oct 2010
There are 2 versions of this paper
Informing Consumers about Themselves
Date Written: October 22, 2010
Abstract
Consumers make mistakes. Imperfect information and imperfect rationality lead to misperception of benefits and costs associated with a product. As a result, consumers might fail to maximise their preferences in product choice or product use. A proposed taxonomy of consumer mistakes draws attention to a less-studied category of mistakes: use-pattern mistakes – mistakes about how the consumer will use the product. Use-pattern mistakes are prevalent. Sellers respond strategically to use-pattern mistakes by redesigning their products, contracts and pricing schemes.
These strategic design responses often exacerbate the welfare costs associated with consumer mistakes. From a policy perspective, focusing on disclosure regulation, the importance of use-pattern mistakes requires more, and better, use-pattern disclosure. In particular, sellers should be required to provide individualised use-pattern information.
Suggested Citation: Suggested Citation
Franco Ferrari
New York University School of Law ( email )
40 Washington Square South
Office 302A
New York, NY 10012-1099
United States
212-992-8123 (Phone)
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Taking Information Seriously: Misrepresentation and Nondisclosure in Contract Law and Elsewhere
-
Helping Consumers Know Themselves
By Emir Kamenica, Sendhil Mullainathan, ...
-
Product Use Information and the Limits of Voluntary Disclosure
By Oren Bar-gill and Oliver J. Board
-
The Institutional Dimension of Consumer Protection
By Samuel Issacharoff and Ian Samuel
-
Competition and Consumer Protection: A Behavioral Economics Account