The Hidden Cost Dilemma

The US federal government is suing Ticketmaster parent company Live Nation, in part over what it says are excessive or junk fees. One feature of these fees is that they’re hidden – you only find out at the end what the true price is. There’s an irony in the case, says Chicago Booth’s Jean Pierre Dube, since government itself is a keen user of hidden fees. In this episode, we talk to Dube about how retailers use hidden fees to obfuscate prices and avoid transparency. Why do hidden fees work? And what’s the solution?