Strategic Product Disclosure and Obfuscation in the Coffee Market under Rational Inattention

• Authors: Stefano Castriota, Luigi Palumbo, Fernando Payró Chew and Amedeo Piolatto
• BSE Working Paper: 1609 | October 2026
• Keywords: rational inattention, Shannon entropy in consumer choice, Arabica vs. Robusta pricing, information acquisition costs, selective disclosure thresholds
• JEL codes: D83, L15, L13

Measuring strategic obfuscation is challenging because firms deliberately conceal quality from researchers and consumers. We investigate how informational frictions generate pricing power using data on 145 ground coffee products from Italian supermarkets, where Arabica content is selectively disclosed or obfuscated. To overcome unobservability, we utilise a theoretical model of consumer rational inattention as empirical scaffolding. The framework predicts a threshold equilibrium: high-quality firms disclose attributes to capture a price premium, whilst lower-quality firms obfuscate to benefit from market pooling. Empirical results confirm selective disclosure, demonstrating how firms actively exploit consumer frictions to protect markups.