Disclosure, Agents, and Consumer Protection
Journal of Institutional and Theoretical Economics, Vol. 167 (2011)
17 Pages Posted: 15 Jul 2010 Last revised: 19 Dec 2012
Date Written: July 15, 2010
Consumers make mistakes, and sophisticated market actors exploit those mistakes. Efforts to promote consumer protection through soft paternalistic interventions, most notably improved disclosure regimes, run into the problem that consumers are overwhelmed by information and may not to invest the time and effort necessary to take advantage of more information. This paper reviews recent attempts to protect consumers without recourse to command-and-control regulation. Instead of further overwhelming consumers with information, this paper proposes that efforts to aid beleaguered consumers should take the form of facilitating a market for intermediaries where independent agents or competitive firms have incentives to assist consumer protection.
JEL Classification: K12
Suggested Citation: Suggested Citation