Advertising Content

Empirical evidence suggests that most advertisements contain little direct informa- tion. Many do not mention prices. We analyze a firm'ss choice of advertising content and the information disclosed to consumers. A firm advertises only product informa- tion, price information, or both; and prefers to convey only limited product information if possible. Extending the "persuasion" game, we show that quality information takes precedence over price information and horizontal product information.Though it may help to force the firm to disclose some product information, it is socially harmful to force it to provide full information if it has sufficient ability to parse the information imparted.