Living in a hidden-fee economy

Laibson and Gabaix aren't conspiracy theorists. Their explanation for the persistence of hidden prices, laid out in "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," describes a complex balancing act, in which companies must weigh the costs of educating consumers against the benefits of duping them. And their work relies on the insight, now common in what's called behavioral economics, that many consumers are far less rational than economists used to think.