We study a firm's incentives to build and maintain reputation for quality, when quality is persistent and can be … investment– depend only on the firm's reputation. MPE vary in frequency of certification and payoffs, but are generally …

a firm with a low reputation to reestablish itself. But, the ability to promote can crowd out incentives for investment … at high reputations; the firm allows its reputation to decay more before it is renewed relative to a firm motivated by …

quality items. In this equilibrium a seller's value function strictly increases in reputation and a seller's type is revealed … within finite time. The analysis highlights a new reputation mechanism based on an endogenous complementarity the market … places between a seller's honesty in pre-trade communication (trust) and his/her ability to deliver good quality (reputation …

There is widespread evidence that some firms use false advertising to overstate the value of their products. Using a … advertising actively influences rational buyers. We analyze the effects of policy under different welfare objectives and establish … a set of demand and parameter conditions where policy optimally permits a positive level of false advertising. Further …

There is widespread evidence that some firms use false advertising to overstate the value of their products. We … advertising actively influences rational buyers, and analyze the effects of policy under different welfare objectives. We … establish precise conditions where policy optimally permits a positive level of false advertising, and show how these conditions …

information about the multiplier. We discuss potential reasons for the deviation between theory and experimental data. …