This paper analyzes a market in which two horizontally differentiated firms compete by setting menus of two-part tariffs, and in which some consumers are not informed about the linear per-unit price component. We consider two regulatory interventions that limit firms’ ability to price...

We examine the interaction between firm prominence and consumer confusion in a duopoly model of price-frame competition. Both frame complexity and frame differentiation are sources of consumer confusion and firms make prominence investments that determine their shares of confused consumers....

This paper studies the relationship between transparency on the consumer side and productivity of firms. We show that more transparent markets are characterized by higher average productivity as firms with low productivity abstain from entering these markets. -- Market Transparency ; Firm...

This paper analyzes a market in which two horizontally differentiated firms compete by setting menus of two-part tariffs, and in which some consumers are not informed about the linear per-unit price component. We consider two regulatory interventions that limit firms’ ability to price...

We examine the effect of direct mail (commonly referred to as junk mail) advertising on individual financial decisions by studying consumer choice of home equity debt contracts. Consistent with the theoretical predictions, we find that financial variables underlying the relative pricing of debt...

A number of studies have pointed to various mistakes that consumers might make in their consumption-saving and financial decisions. We utilize a unique market experiment conducted by a large U.S. bank to assess how systematic and costly such mistakes are in practice. The bank offered consumers a...

Higher sales tax in the home country relative to a neighboring country creates a huge incentive for consumers who live closer to the border to purchase goods across the border. Using a unique panel dataset of consumer financial transactions, we find that, when facing higher domestic sales tax,...

This paper uses a dataset from one of the leading subprime lenders in America, containing detailed information on borrower and loan characteristics, finds that borrowers from the financial industry, who have higher financial literacy, are less likely to default. This effect cannot be explained...

Using account-level credit card data from a major Turkish bank we show the impact of a unique restrictive credit card policy on consumption and debt repayment behavior. The complex policy imposes two types of soft liquidity constraints for certain credit card holders: progressively higher...

Every year many states offer sales tax holidays (STHs) temporarily exempting items like clothes, shoes and school supplies from the state sales tax. We use two data sets, the Diary portion of the Consumer Expenditure Survey and a unique data set of credit cards transactions, to investigate the...