Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society
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Journal of Economic Theory and Econometrics
JETEM/계량경제학보/計量經濟學報/JKES
Journal of the Korean Econometric Society

Product Announcement and Reputation in a Cheap Talk Game

Vol.21, No.4, December , 59–78



  •   (Department of Economics, University of New South Wales)

  •   (Department of Economics, Korea University)

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Abstract  

Firms keep introducing new products in markets. In making a buy-or-wait decision, consumers rely on information provided by firms. In a cheap-talk game model (i.e., Crawford and Sobel (1982), we identify a simple informative equilibrium, in which firms make a discrete announcement, either low or high quality, even though product quality space is continuous. We characterize the equilibrium properties and evaluate its welfare effects.


Keywords
   Product announcements, Cheap talk, Reputation

JEL classification codes
   L1, D8
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