January 2016
Beginner
562 pages
21h 17m
English
Content preview from Handbook of Media Economics, vol 1A
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Finally, theoretical settings involving search goods allow for analyzing the choice of
disclosing price information in ads. A firm may choose to disclose only horizontal match
information with no price, when it can fine-tune the amount of product information it is
transmitting to the consumer. In a cheap-talk context, the provision of soft quality infor-
mation may be enough to reassure the consumer that the price is not too high. Prices
could also have a signaling role, along the lines of the material in the next section,
and firms might choose to hide them because showing them might be an adverse signal
about product information.
4.4. ADVERTISING AS A SIGNAL
From the analysis of product advertising, it appears that firms that sell high-quality
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