Abstract for: The Hidden Cost of Hidden Fees: A Dynamic Analysis of Price Obfuscation in Online Platforms

We study the effects of price obfuscation on consumer behavior and platform firm performance. Where traditional firm economic models have shown that obfuscation tactics can be profitable for firms even in repeated interactions, more recent work in behavioral operations management claims that these tactics can be harmful not just to consumers but to firms themselves. We contribute to these studies by understanding the role and incentives of platform firms as intermediaries to facility the matching process, and by using simulation modeling methods that allow us to expand model boundaries, and study appropriate time horizons. We find evidence to suggest that building trust through disclosure is a dynamic attribute that may be dominated by worse-before better outcomes. The results provide evidence that the platform pricing transparency decisions should differ depending on industrial context.