Handbook of Media Economics, vol 1A

deal by committing in its ad to price below 1/2. Indeed, Anderson and Renault (2006)

establish that the firm cannot improve upon a disclosure strategy that consists of a simple

binary signal that tells the consumer whether her match is above or below a threshold ^r

with no further information. The intuition is as follows. Given the threshold match strat-

egy, it is optimal for the firm to price so as to make the consumer just indifferent between

visiting and not visiting when she learns her match exceeds the threshold. By providing

more information, the firm can only improve the expected surplus of some consumer

types with a match well in excess of the threshold, which does not increase sales because

these types are visiting anyway and then buying ...