Spurious complexity and common standards in markets for consumer goods Volume 3 Jena Economic Research Papers 2009-10-15 2009 2007 2009-084 common standard spurious complexity cognitive limitations It has been argued that cognitively constrained consumers respond sub-optimally to complex decision problems, and that firms can exploit these limitations by introducing spurious complexity into tariff structures, weakening price competition. We model a countervailing force. Restricting one’s choices to the most easily comparable options is a psychologically well-attested heuristic. Consumers who use this heuristic favour firms that follow common conventions about tariff structures. Because a ‘common standard’ promotes price competition, a firm’s use of it signals that it offers value for money, validating the heuristic. This allows an equilibrium in which firms use common standards and set competitive prices. jportal_jpjournal_00000016 2009-10-15T08:54:58.884Z 2010-12-17T11:54:09.989Z