Consumer Surplus in the Dark

• Department of Economics

In this seminar, Jakub Steiner (University of Zurich) will present his paper "Consumer Surplus in the Dark."

 A growing body of evidence suggests that consumers are not fully informed about prices, contrary to a critical assumption of classical welfare analysis. We analyse a model in which consumers can vary in both their preferences and their information about prices. Given an aggregate demand curve and a distribution of prices, we identify the set of rationalisable aggregate consumer surpluses. Each surplus in this set can be rationalised with simple information structures and preferences. We also identify the range of possible changes in surplus associated with a marginal change in the distribution of prices.

Co-authors: Pavel Kocourek and Colin Stewart