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Steering Fallible Consumers
Title / Series / Name
Economic Journal
Publication Volume
133
Publication Issue
652
Pages
Editors
Keywords
Economics and Econometrics
URI
https://hdl.handle.net/20.500.14018/28096
Abstract
Online intermediaries with information about a consumer’s tendencies often ‘steer’ her toward products she is more likely to purchase. We analyse the welfare implications of this practice for ‘fallible’ consumers, who make statistical and strategic mistakes in evaluating offers. The welfare effects depend on the nature and quality of the intermediary’s information and on properties of the consumer’s mistakes. In particular, steering based on high-quality information about the consumer’s mistakes is typically harmful, sometimes extremely so. We argue that much real-life steering is of this type, raising the scope for a broader regulation of steering practices.
Topic
Publisher
Place of Publication
Type
Journal article
Date
2023-02-15
Language
ISBN
Identifiers
10.1093/ej/ueac093