The folks at the Consumerist explain just how unhealthy it can be to chow down at the movie theater. Here's the intro: "Like to snack at the movies? That tub of popcorn and large soda can amount to almost a full day's calories, two days' worth of fat and a cup of sugars." The article includes a bunch of data from a Consumer Reports investigation.
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Do the benefits of competition extend to a world with imperfectly rational consumers? I argue that sellers, operating in a competitive market, will design their products, contracts and pricing schemes in response to consumer misconception, resulting in both efficiency losses and harm to consumers. Under certain conditions, competition provides incentives for sellers to educate consumers and reduce misconception, but these mistake-correction forces are limited.
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Do the benefits of competition extend to a world with imperfectly rational consumers? I argue that sellers, operating in a competitive market, will design their products, contracts and pricing schemes in response to consumer misconception, resulting in both efficiency losses and harm to consumers.
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