See on Scoop.it – Bounded Rationality and Beyond
This report was commissioned by the Office of Fair Trading (OFT) from London Economics in association with Steffen Huck and Jidong Zhou (University College London). It examines the implications of consumer behavioural biases for firms’ decisions and hence for competitive equilibria.
Consumer behavioural biases imply that consumers may not behave in the fully rational way that many economic models presume. What impact do these biases
have on competition? Specifically, how does competition and pricing change when consumers are biased? Can inefficiencies that arise from consumer behavioural biases be mitigated by lowering barriers to entry? Do biased consumers make rational ones better or worse off? And will biased consumer behaviour be overcome through learning or education?
See on web-docs.stern.nyu.edu
Alessandro Cerboni
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