Helping Consumers Know Themselves
University of Chicago - Booth School of Business - Economics
Harvard University - Department of Economics; National Bureau of Economic Research (NBER)
Richard H. Thaler
University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)
January 17, 2011
Firms sometimes know more about a consumer's expected usage than the consumer herself. We explore the consequences of this reversal in the information asymmetry. We analyze the consequences of making consumers more informed about themselves. While making consumers more informed decreases their expenditure conditional on a given set of prices, equilibrium prices may increase, offsetting the direct benefit of information. We discuss theoretical and practical issues surrounding so-called RECAP regulation that would require firms to provide each consumer with information about her own usage of the firm's product.
Number of Pages in PDF File: 11
Keywords: disclosure, regulation
JEL Classification: D03, D18, D82
Date posted: January 18, 2011
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