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- W3125790907 abstract "For many goods and services, such as cellular-phone service and debit-card transactions, the price of the next unit of service depends on past usage. As a result, consumers who are inattentive to their past usage but are aware of contract terms may remain uncertain about the price of the next unit. I develop a model of inattentive consumption, derive equilibrium pricing when consumers are inattentive, and evaluate bill-shock regulation requiring firms to disclose information that substitutes for attention. When inattentive consumers are heterogeneous and unbiased, bill-shock regulation reduces social welfare in fairly-competitive markets, which may be the effect of the FCC's recent bill-shock agreement. If inattentive consumers underestimate their demand, however, then bill-shock regulation can lower market prices and protect consumers from exploitation. Hence the Federal Reserve's new opt-in rule for debit-card overdraft protection may substantially benefit consumers." @default.
- W3125790907 created "2021-02-01" @default.
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- W3125790907 date "2012-07-03" @default.
- W3125790907 modified "2023-09-27" @default.
- W3125790907 title "Consumer Inattention and Bill-Shock Regulation" @default.
- W3125790907 hasPublicationYear "2012" @default.
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