Document Type

Article

Publication Date

1986

Center/Program

Center for Contract and Economic Organization

Center/Program

Program in the Law and Economics of Capital Markets

Abstract

How do individuals make choices? In recent years, economists, psychologists and legal academics have searched for answers to various aspects of this question. One topic of recent interest, for example, concerns a lingering problem in information theory: Does consumer inability to process "too much" information cause market failure?1 The normative implications of this question raise significant policy issues. If consumers' cognitive circuits can become overloaded, then information disclosure is less appealing than direct regulation as a solution to problems of market failure.

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