Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Persuasive Puffery

Archishman Chakraborty and Rick Harbaugh

2012 Fall Midwest Theory Meetings

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Puffery

Sellers tend to exaggerate

“World’s best hotdogs!”

“That suit looks perfect on you!”

“Our service can’t be beat!”

How can such “puffery”be persuasive?

Seller has clear incentive to exaggerate

Buyers should anticipate this and ignore seller

So puffery preys on credulous buyers

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Puffery

Sellers tend to exaggerate

“World’s best hotdogs!”

“That suit looks perfect on you!”

“Our service can’t be beat!”

How can such “puffery”be persuasive?

Seller has clear incentive to exaggerate

Buyers should anticipate this and ignore seller

So puffery preys on credulous buyers

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Legally Defined Term

Court ruled Papa John’s slogan of “better ingredients, betterpizza”was puffery

FTC definition: Puffery is “term frequently used to denote theexaggerations reasonably to be expected of a seller as to thedegree of quality of his product, the truth or falsity of whichcannot be precisely determined.”

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Legally Defined Term

Court ruled Papa John’s slogan of “better ingredients, betterpizza”was puffery

FTC definition: Puffery is “term frequently used to denote theexaggerations reasonably to be expected of a seller as to thedegree of quality of his product, the truth or falsity of whichcannot be precisely determined.”

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

How model puffery?

Signaling game (e.g., Spence, 1973)?

But messages are not costly

Persuasion/disclosure game (e.g., Milgrom, 1981)?

But messages are not verifiable

Screening game (e.g., Stiglitz, 1975)?

But no commitment by receiver

Puffery seems just like “cheap talk”

Costless, unverifiable messages with no commitment byreceiver (Crawford and Sobel, 1982)

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

How model puffery?

Signaling game (e.g., Spence, 1973)?

But messages are not costly

Persuasion/disclosure game (e.g., Milgrom, 1981)?

But messages are not verifiable

Screening game (e.g., Stiglitz, 1975)?

But no commitment by receiver

Puffery seems just like “cheap talk”

Costless, unverifiable messages with no commitment byreceiver (Crawford and Sobel, 1982)

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Puffery as comparative cheap talk

What does “World’s best hotdogs”mean?

“Don’t eat our hamburgers!”

“Our service can’t be beat!”

“Good thing because you’ll need it.”

“That suit looks perfect on you!”

“Better than the other one.”

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Puffery as comparative cheap talk

What does “World’s best hotdogs”mean?

“Don’t eat our hamburgers!”

“Our service can’t be beat!”

“Good thing because you’ll need it.”

“That suit looks perfect on you!”

“Better than the other one.”

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Puffery as comparative cheap talk

What does “World’s best hotdogs”mean?

“Don’t eat our hamburgers!”

“Our service can’t be beat!”

“Good thing because you’ll need it.”

“That suit looks perfect on you!”

“Better than the other one.”

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Puffery as comparative cheap talk

What does “World’s best hotdogs”mean?

“Don’t eat our hamburgers!”

“Our service can’t be beat!”

“Good thing because you’ll need it.”

“That suit looks perfect on you!”

“Better than the other one.”

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Puffery as comparative cheap talk

What does “World’s best hotdogs”mean?

“Don’t eat our hamburgers!”

“Our service can’t be beat!”

“Good thing because you’ll need it.”

“That suit looks perfect on you!”

“Better than the other one.”

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Puffery as comparative cheap talk

What does “World’s best hotdogs”mean?

“Don’t eat our hamburgers!”

“Our service can’t be beat!”

“Good thing because you’ll need it.”

“That suit looks perfect on you!”

“Better than the other one.”

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Can be a lot of information in puffery

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Marketing literature seems consistent

Marketing experiments find pufffery is surprising credible

Puffery of a product’s attribute raises buyer impressions of it

But also lowers buyer impressions of other attributes

Overall puffery is sometimes persuasive

Tends to raise purchase intent when intent is low

And lower purchase intent when intent is high

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Marketing literature seems consistent

Marketing experiments find pufffery is surprising credible

Puffery of a product’s attribute raises buyer impressions of it

But also lowers buyer impressions of other attributes

Overall puffery is sometimes persuasive

Tends to raise purchase intent when intent is low

And lower purchase intent when intent is high

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

When does communication raise the probability of a sale?

Buyer utility for good i is Vi + εi

Buyer has expectation E [Vi ] = viBuy good i if vi + εi > maxj 6=i{vj + εj}Assume logit model so Pi = evi /(1+∑j e

vj )

Suppose V1 = β1θ1 − p1 where seller knows θ1

Should seller reveal θ1 to buyer?

Pi is S-shaped so first convex then concave

Information induces greater dispersion in v1So on average information raises E [Pi ] if Pi is low

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

When does communication raise the probability of a sale?

Buyer utility for good i is Vi + εi

Buyer has expectation E [Vi ] = viBuy good i if vi + εi > maxj 6=i{vj + εj}Assume logit model so Pi = evi /(1+∑j e

vj )

Suppose V1 = β1θ1 − p1 where seller knows θ1

Should seller reveal θ1 to buyer?

Pi is S-shaped so first convex then concave

Information induces greater dispersion in v1So on average information raises E [Pi ] if Pi is low

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

When does communication raise the probability of a sale?

Buyer utility for good i is Vi + εi

Buyer has expectation E [Vi ] = viBuy good i if vi + εi > maxj 6=i{vj + εj}Assume logit model so Pi = evi /(1+∑j e

vj )

Suppose V1 = β1θ1 − p1 where seller knows θ1

Should seller reveal θ1 to buyer?

Pi is S-shaped so first convex then concave

Information induces greater dispersion in v1So on average information raises E [Pi ] if Pi is low

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Gains from disclosure of information generally

We show that convexity of P1 for low values and concavity forhigh values extends to a broad class of discrete choice models

Then just use Jensen’s inequality

Proposition

On average for different realizations of a seller’s information,truthfully disclosing information raises (lowers) the probability of asale if this probability is suffi ciently low (high) for all Vi .

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Gains from disclosure of information generally

We show that convexity of P1 for low values and concavity forhigh values extends to a broad class of discrete choice models

Then just use Jensen’s inequality

Proposition

On average for different realizations of a seller’s information,truthfully disclosing information raises (lowers) the probability of asale if this probability is suffi ciently low (high) for all Vi .

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Example with one good and outside option

V1 = β1θ1 − p1β1 = 4, p1 = 4

Pr [θ1 = 0] = Pr [θ1 = 1] =1/2No info:v1 = 4E [θ1]− 4 = −2,P1 = e−2/(1+ e−2) = .119Good news:v1 = 4(1)− 4 = 0, soP1 = .5

Bad news:v1 = 4(0)− 4 = −4, soP1 = .024

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Does information have to be verifiable?

Communication of seller information raises probability of asale on average when probability is low

So, ex ante, a seller would like to commit to truthfullyrevealing information

But a seller with bad information would like to lie and claimto have good information

So most of the literature looks at verifiable information

Can puffery also be persuasive?

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Example of puffery that pushes one attribute

Suppose V1 = β1θ1 + β2θ2 − p1Seller knows θ1,θ2 and buyer knows β1,β2Pr[θ1 = 1, θ2 = 0] = Pr[θ1 = 0, θ2 = 1] = 1/2Pr[β1 = 4, β2 = 0] = Pr[β1 = 0, β2 = 4] = 1/2No information revealed:

Half time v1 = 4E [θ1 ] + 0E [θ2 ]− 4 = −2Half time v1 = 0E [θ1 ] + 4E [θ2 ]− 4 = −2

Seller indicates θ1 > θ2 so E [θ1] = 1, E [θ2] = 0

Half time v1 = 4(1) + 0(0)− 4 = 0Half time v1 = 0(1) + 4(0)− 4 = −4

Seller indicates θ2 > θ1 so E [θ1] = 0, E [θ2] = 1

Half time v1 = 4(0) + 0(1)− 4 = −4Half time v1 = 0(0) + 4(1)− 4 = 0

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Example of puffery that pushes one attribute

Suppose V1 = β1θ1 + β2θ2 − p1Seller knows θ1,θ2 and buyer knows β1,β2Pr[θ1 = 1, θ2 = 0] = Pr[θ1 = 0, θ2 = 1] = 1/2Pr[β1 = 4, β2 = 0] = Pr[β1 = 0, β2 = 4] = 1/2No information revealed:

Half time v1 = 4E [θ1 ] + 0E [θ2 ]− 4 = −2Half time v1 = 0E [θ1 ] + 4E [θ2 ]− 4 = −2

Seller indicates θ1 > θ2 so E [θ1] = 1, E [θ2] = 0

Half time v1 = 4(1) + 0(0)− 4 = 0Half time v1 = 0(1) + 4(0)− 4 = −4

Seller indicates θ2 > θ1 so E [θ1] = 0, E [θ2] = 1

Half time v1 = 4(0) + 0(1)− 4 = −4Half time v1 = 0(0) + 4(1)− 4 = 0

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Puffery increases variance of buyer valuations

V1 = β1θ1 + β2θ2 − p1No info: v1 = −2 soE [P1] = .119

Puffery of attribute 1:v1 = 0 or v1 = −4 soE [P1] = .262

Puffery of attribute 2:v1 = −4 or v1 = 0 soE [P1] = .262

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Persuasive puffery —example

Previous example a bit suspicious

Suppose again V1 = β1θ1 + β2θ2 − p1But assume θi uniform i.i.d. so prior E [θi ] = 1/2 or ai = 1/2And assume βi normal i.i.d. with mean µ and variance σ2

Seller puffs up one attribute at expense of other

Suppose two messages m ∈ {m1,m2} where m1 interpretedas θ1 ≥ θ2 and m2 interpreted as θ1 < θ2

Use notation aji = E [θi |mj ]Then by uniformity (a11, a

12) = (

23 ,13 ) and (a

21, a

22) = (

13 ,23 )

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Persuasive puffery —example

Previous example a bit suspicious

Suppose again V1 = β1θ1 + β2θ2 − p1But assume θi uniform i.i.d. so prior E [θi ] = 1/2 or ai = 1/2And assume βi normal i.i.d. with mean µ and variance σ2

Seller puffs up one attribute at expense of other

Suppose two messages m ∈ {m1,m2} where m1 interpretedas θ1 ≥ θ2 and m2 interpreted as θ1 < θ2

Use notation aji = E [θi |mj ]Then by uniformity (a11, a

12) = (

23 ,13 ) and (a

21, a

22) = (

13 ,23 )

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Persuasive attribute puffery —example

E [θi ] = 1/2E [θ1|θ1 > θ2] = 2/3E [θ2|θ1 > θ2] = 1/3E [θ1|θ1 < θ2] = 1/3E [θ2|θ1 < θ2] = 2/3

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Persuasive attribute puffery —example

(a1, a2) = ( 12 ,12 ), (a

11, a

12) = (

23 ,13 ), (a

21, a

22) = (

13 ,23 )

No information: v1 = β1(1/2) + β2(1/2)− p1Message 1: v1 = β1(2/3) + β2(1/3)− p1Message 2: v1 = β1(1/3) + β2(2/3)− p1

No information Var [v1] = σ2(1/2)2 + σ2(1/2)2 = (1/2)σ2

Message 1: Var [v1] = σ2(2/3)2 + σ2(1/3)2 = (5/9)σ2

Message 2: Var [v1] = σ2(1/3)2 + σ2(2/3)2 = (5/9)σ2

So puffery increases variance - and therefore increasesprobability of a sale when probability is low

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Persuasive attribute puffery —example

(a1, a2) = ( 12 ,12 ), (a

11, a

12) = (

23 ,13 ), (a

21, a

22) = (

13 ,23 )

No information: v1 = β1(1/2) + β2(1/2)− p1Message 1: v1 = β1(2/3) + β2(1/3)− p1Message 2: v1 = β1(1/3) + β2(2/3)− p1

No information Var [v1] = σ2(1/2)2 + σ2(1/2)2 = (1/2)σ2

Message 1: Var [v1] = σ2(2/3)2 + σ2(1/3)2 = (5/9)σ2

Message 2: Var [v1] = σ2(1/3)2 + σ2(2/3)2 = (5/9)σ2

So puffery increases variance - and therefore increasesprobability of a sale when probability is low

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Persuasive attribute puffery —example

(a1, a2) = ( 12 ,12 ), (a

11, a

12) = (

23 ,13 ), (a

21, a

22) = (

13 ,23 )

No information: v1 = β1(1/2) + β2(1/2)− p1Message 1: v1 = β1(2/3) + β2(1/3)− p1Message 2: v1 = β1(1/3) + β2(2/3)− p1

No information Var [v1] = σ2(1/2)2 + σ2(1/2)2 = (1/2)σ2

Message 1: Var [v1] = σ2(2/3)2 + σ2(1/3)2 = (5/9)σ2

Message 2: Var [v1] = σ2(1/3)2 + σ2(2/3)2 = (5/9)σ2

So puffery increases variance - and therefore increasesprobability of a sale when probability is low

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

This example with two goods

θ1j i.i.d. on [0, 1], and θ2ji.i.d. on [0, 1.2]

β1 and β2 normal, mean10 and variance 5

Prices same,p1 = p2 = 10

Without puffery:P1 = 5.4%, P2 = 58.2%

With attribute puffery:P2 = 10.7%, P2 = 50.2%

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

General results: Puffery of product attributes

Example assumes θi iid and βi iid

But if buyer is already leaning toward one good is that aproblem?

Seller has an incentive to pander to buyer preferences —buyeranticipates this and “discounts”puffery of that good

Using results from Chakraborty and Harbaugh (2010) showpuffery is still credible

Proposition

For random coeffi cients, puffery of an attribute of product i strictlyraises (lowers) sales if sales are suffi ciently small (large) for all Vi .

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

General results: Puffery of product attributes

Example assumes θi iid and βi iid

But if buyer is already leaning toward one good is that aproblem?

Seller has an incentive to pander to buyer preferences —buyeranticipates this and “discounts”puffery of that good

Using results from Chakraborty and Harbaugh (2010) showpuffery is still credible

Proposition

For random coeffi cients, puffery of an attribute of product i strictlyraises (lowers) sales if sales are suffi ciently small (large) for all Vi .

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Negative puffery

What if seller has information on competing product?

Could then engage in negative puffery and credibly highlightweakness of that product

Good idea when market share is low

(But in logit example not as good as highlighting ownstrength)

Proposition

For random coeffi cients, negative puffery by the seller of product iabout an attribute of product j strictly raises (lowers) sales ofproduct i if sales of product j are suffi ciently large (small) for allVi , Vj .

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Negative puffery

What if seller has information on competing product?

Could then engage in negative puffery and credibly highlightweakness of that product

Good idea when market share is low

(But in logit example not as good as highlighting ownstrength)

Proposition

For random coeffi cients, negative puffery by the seller of product iabout an attribute of product j strictly raises (lowers) sales ofproduct i if sales of product j are suffi ciently large (small) for allVi , Vj .

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Comparative advantage puffery

Puffery that highlights the comparative advantage of own productIncreases variance in buyer valuations for your product

Pulls in some buyers

And pushes some buyers away

Increases variance in buyer valuations for competing product

Pulls in some buyers (some from you)

And pushes some buyers away (some to you)

Proposition

For random coeffi cients, puffery of an attribute that is thecomparative advantage of product i relative to that of product jstrictly raises (lowers) sales of product i if sales of product i aresuffi ciently small (large) for all Vi and Vj .

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Comparative advantage puffery

Puffery that highlights the comparative advantage of own productIncreases variance in buyer valuations for your product

Pulls in some buyers

And pushes some buyers away

Increases variance in buyer valuations for competing product

Pulls in some buyers (some from you)

And pushes some buyers away (some to you)

Proposition

For random coeffi cients, puffery of an attribute that is thecomparative advantage of product i relative to that of product jstrictly raises (lowers) sales of product i if sales of product i aresuffi ciently small (large) for all Vi and Vj .

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Comparative advantage puffery

Puffery that highlights the comparative advantage of own productIncreases variance in buyer valuations for your product

Pulls in some buyers

And pushes some buyers away

Increases variance in buyer valuations for competing product

Pulls in some buyers (some from you)

And pushes some buyers away (some to you)

Proposition

For random coeffi cients, puffery of an attribute that is thecomparative advantage of product i relative to that of product jstrictly raises (lowers) sales of product i if sales of product i aresuffi ciently small (large) for all Vi and Vj .

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Comparative advantage puffery

Puffery that highlights the comparative advantage of own productIncreases variance in buyer valuations for your product

Pulls in some buyers

And pushes some buyers away

Increases variance in buyer valuations for competing product

Pulls in some buyers (some from you)

And pushes some buyers away (some to you)

Proposition

For random coeffi cients, puffery of an attribute that is thecomparative advantage of product i relative to that of product jstrictly raises (lowers) sales of product i if sales of product i aresuffi ciently small (large) for all Vi and Vj .

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Absolute Advantage Puffery

Could also compare own overall quality with competitor’s

Surprisingly, this can be credible!

But definitely not a good idea if there is insuffi cientuncertainty over coeffi cients

Proposition

For fixed coeffi cients, puffery of the overall value of product i ornegative puffery of the overall value of product j strictly lowerssales of product i .

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Absolute Advantage Puffery

Could also compare own overall quality with competitor’s

Surprisingly, this can be credible!

But definitely not a good idea if there is insuffi cientuncertainty over coeffi cients

Proposition

For fixed coeffi cients, puffery of the overall value of product i ornegative puffery of the overall value of product j strictly lowerssales of product i .

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Can unverifiable puffery beat full verifiable disclosure?

Disclosure of all information helps a seller (on average) whenPi is convex

Puffery (always) helps a seller when Pi is quasiconvex

So if Pi is quasiconvex but not convex then puffery can bebetter

Hotdogs and hamburgers example?

Seller can be better off credibility indicating that one is betterand nothing more

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Can unverifiable puffery beat full verifiable disclosure?

Disclosure of all information helps a seller (on average) whenPi is convex

Puffery (always) helps a seller when Pi is quasiconvex

So if Pi is quasiconvex but not convex then puffery can bebetter

Hotdogs and hamburgers example?

Seller can be better off credibility indicating that one is betterand nothing more

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Puffery as cheap talk

Definition of puffery seems to be that of “cheap talk”

One dimensional cheap talk models require some commonalityof interest between expert and decision maker

But what if seller only interested in making a sale?

Suppose seller knows about two attributes of product

Seller benefits from cheap talk if probability of a sale is low

Fits results from the marketing literature?

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Persuasion vs cheap talk games in advertising

Persuasion game approach

“Objective/verifiable/hard information”

Meaning of a message clear —but will the seller disclose it?

In equilibrium usually have unravelling so all types disclose

Good information types benefit, bad information types lose

Regulation focuses on preventing lying

Cheap talk game approach

“Subjective/nonverifiable/soft information”

Meaning of messages endogenous to seller incentives

Buyers must be knowledgeable, sophisticated

Seller always benefits if low probability of a sale

Legal exception for puffery seems to make sense

Regulation should focus on making incentives transparent?

Introduction Cheap Talk Persuasion Puffery Negative Comp. Adv. Abs. Adv. Disclosure Conclusion

Persuasion vs cheap talk games in advertising

Persuasion game approach

“Objective/verifiable/hard information”

Meaning of a message clear —but will the seller disclose it?

In equilibrium usually have unravelling so all types disclose

Good information types benefit, bad information types lose

Regulation focuses on preventing lying

Cheap talk game approach

“Subjective/nonverifiable/soft information”

Meaning of messages endogenous to seller incentives

Buyers must be knowledgeable, sophisticated

Seller always benefits if low probability of a sale

Legal exception for puffery seems to make sense

Regulation should focus on making incentives transparent?