Handbook of Media Economics, vol 1A

strictly better off telling the truth). In terms of modeling, this can be captured by

considering a product located on a circle sold to a consumer whose type is a location

uniformly distributed around that circle and the match is decreasing in the distance

between the locations. Then all product types have the same full information demand

and the firm cannot benefit from misrepresenting its type.

Chakraborty and Harbaugh

(2014)

use a related argument in a random utility discrete-choice model with random

coefficients. In their setting, a firm may credibly claim that one of its attributes is very

attractive to consumers (puffery about the best sandwich in the world) because by doing

so, it induces some adverse anticipations about some other attribute ...