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Price and Advertising Signals of Product Quality

Опубликовано на портале: 22-01-2007
Journal of Political Economy. 1986.  Vol. 94. No. 4. P. 796-821. 
We present a signaling model, based on ideas of Phillip Nelson, in which both the introductory price and the level of directly "uninformative" advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good. Repeat purchases play a crucial role in our model. A second focus of the paper is on illustrating an approach to refining the set of equilibria in signaling games with multiple potential signals.

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