THE COST OF INACCURATE AUTOMOBILE MILEAGE INFORMATION

The model in this paper integrates the possibility of misinformation into consumer utility theory. If the utility realized from a good differs from the utility anticipated at time of purchase, shifts in demand would occur, and thus changes in consumer surplus. These changes provide a measure of the cost of misinformation or value of improved information. The empirical analysis yields estimates of the private and social cost of inaccuracies in automobile buyers; pre-purchase mileage estimates. If automobile purchases are based on imperfect gasoline mileage information, a discrepancy results between expected and actual fuel-efficiency. The data source is a survey of 1980 model car buyers conducted by the authors.


Issue Date:
1981
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/14056
Total Pages:
30
Series Statement:
Staff Paper P81-22




 Record created 2017-04-01, last modified 2017-08-23

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