Advertising and Consumer Memory
نویسنده
چکیده
The paper explores the idea that advertising interferes with consumers’ memories of product experiences. We consider a two-period model where a monopolist sells an experience good to a buyer who may only imperfectly recall her first period experience. When advertising activates memory, it enables learning and may induce the buyer to try out the good initially. Moreover, while costly advertising may, as usual, serve as a signalling device, costless advertising enables the monopolist to signal his type by price alone. When advertising distorts postexperience memory, it may offset the distortions caused by monopoly pricing.
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