Informing Consumers About Themselves

27 Pages Posted: 25 Oct 2010

See all articles by Oren Bar-Gill

Oren Bar-Gill

Harvard Law School

Franco Ferrari

New York University School of Law

Multiple version iconThere are 2 versions of this paper

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

Bar-Gill, Oren and Ferrari, Franco, Informing Consumers About Themselves (October 22, 2010). Erasmus Law Review, Vol. 3, No. 2, 2010, Available at SSRN: https://ssrn.com/abstract=1697509

Oren Bar-Gill (Contact Author)

Harvard Law School ( email )

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Franco Ferrari

New York University School of Law ( email )

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United States
212-992-8123 (Phone)

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