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  • June 29, 2022
  • Other Article
  • Management Science Review

Strategic Complexity? Using Experiments to Understand and Overcome Obfuscation

By: Michael Luca, Ginger Zhe Jin and Daniel Martin
  • Format:Electronic
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Abstract

Credit card companies must decide what product features to disclose to consumers, such as payment schedules, penalties, and fees--and also whether to present them clearly or bury them in the fine print. Firms face similar choices in settings ranging from privacy policies to quarterly financial disclosures. This exposes a challenge at the heart of disclosure design: Companies have discretion about not only what information to disclose to customers but also how to disclose it. Increasingly, and across a wide variety of industries, consumers are bombarded with complex information from companies, which has the potential to undermine the value of disclosure. New research by Jin, Luca, and Martin, published in Management Science, suggests that complexity might arise from the strategic incentives that companies face and that complexity might lead consumers to make systematic mistakes that are not in their own interest.

Keywords

Obfuscation; Credit Cards; Strategic Incentives; Complexity; Agreements and Arrangements; Customers; Consumer Behavior; Financial Services Industry

Citation

Luca, Michael, Ginger Zhe Jin, and Daniel Martin. "Strategic Complexity? Using Experiments to Understand and Overcome Obfuscation." Management Science Review (June 29, 2022). (Summary of "Complex Disclosure," Management Science, May 2022.)
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About The Author

Michael Luca

Negotiation, Organizations & Markets
→More Publications

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More from the Authors
  • Shanty Real Estate: Teaching Note Supplement By: Michael Luca
  • Black Ownership Matters: Does Revealing Race Increase Demand for Minority-Owned Businesses? By: Abhay Aneja, Michael Luca and Oren Reshef
  • Digital Public Health Interventions at Scale: The Impact of Social Media Advertising on Beliefs and Outcomes Related to COVID Vaccines By: Susan Athey, Kristen Grabarz, Michael Luca and Nils Wernerfelt
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