Helping Consumers Know Themselves

11 Pages Posted: 18 Jan 2011  

Emir Kamenica

University of Chicago - Booth School of Business - Economics

Sendhil Mullainathan

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)

Date Written: January 17, 2011

Abstract

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.

Keywords: disclosure, regulation

JEL Classification: D03, D18, D82

Suggested Citation

Kamenica, Emir and Mullainathan, Sendhil and Thaler, Richard H., Helping Consumers Know Themselves (January 17, 2011). Available at SSRN: https://ssrn.com/abstract=1742505 or http://dx.doi.org/10.2139/ssrn.1742505

Emir Kamenica (Contact Author)

University of Chicago - Booth School of Business - Economics ( email )

Graduate School of Business
5807 S. Woodlawn Ave.
Chicago, IL 60637
United States

Sendhil Mullainathan

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States
617-496-2720 (Phone)
617-495-7730 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
617-588-1473 (Phone)
617-876-2742 (Fax)

Richard H. Thaler

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-5208 (Phone)
773-702-0458 (Fax)

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