Either those terms represent an efficient contract or they don’t. The most obvious way that they wouldn’t would be if they tricked you, and as a practical matter that is where most of the action is. Originally it sounded like you agreed that you were being tricked also, but in a milder sense. If you positively prefer those terms, then in your case they are efficient. But I rather doubt that these are really terms that you would have chosen.
As for the issue of competition, that’s not how it works. When Laibson presented the paper I referred to in the main post, my recollection is that he said that, while the credit card industry is quite competitive, the way that competition happens is that the companies use expensive promotions to identify myopic consumers. So competition doesn’t benefit consumers, and in the end it doesn’t even benefit the credit card companies! It’s pure social waste.
Either those terms represent an efficient contract or they don’t. The most obvious way that they wouldn’t would be if they tricked you, and as a practical matter that is where most of the action is. Originally it sounded like you agreed that you were being tricked also, but in a milder sense. If you positively prefer those terms, then in your case they are efficient. But I rather doubt that these are really terms that you would have chosen.
As for the issue of competition, that’s not how it works. When Laibson presented the paper I referred to in the main post, my recollection is that he said that, while the credit card industry is quite competitive, the way that competition happens is that the companies use expensive promotions to identify myopic consumers. So competition doesn’t benefit consumers, and in the end it doesn’t even benefit the credit card companies! It’s pure social waste.