Informing Consumers about Themselves

72 Pages Posted: 5 Dec 2007  

Oren Bar-Gill

Harvard Law School

Multiple version iconThere are 2 versions of this paper

Date Written: August 2007

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 maximize 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 individualized use-pattern information.

Suggested Citation

Bar-Gill, Oren, Informing Consumers about Themselves (August 2007). NYU Law and Economics Research Paper No. 07-44. Available at SSRN: https://ssrn.com/abstract=1056381 or http://dx.doi.org/10.2139/ssrn.1056381

Oren Bar-Gill (Contact Author)

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States

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