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Viewer Sampling and Quality Signaling in a Television Market

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  • Levent Çelik

Abstract

This paper analyzes a single television station’s choice of airing tune-ins (preview advertisements). I consider two consecutive programs located along a unit line. Potential viewers know the earlier program but are uncertain about the later one. They may learn it through a tune-in if they watch the earlier program and the television station chooses to air a tune-in, or by directly sampling it for a few minutes. If the sampling cost is sufficiently low, the unique perfect Bayesian equilibrium (PBE) exhibits no tune-ins. Otherwise, the unique PBE involves a tune-in unless the two programs are too dissimilar. When the programs are also quality-differentiated, the willingness to air a tune-in, and thus to disclose location information, may be sufficient to signal high quality without any dissipative advertising.

Suggested Citation

  • Levent Çelik, 2008. "Viewer Sampling and Quality Signaling in a Television Market," CERGE-EI Working Papers wp363, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
  • Handle: RePEc:cer:papers:wp363
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    File URL: http://www.cerge-ei.cz/pdf/wp/Wp363.pdf
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    References listed on IDEAS

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    1. Bharat N. Anand & Ron Shachar, 2011. "Advertising, the matchmaker," RAND Journal of Economics, RAND Corporation, vol. 42(2), pages 205-245, June.
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    3. Kihlstrom, Richard E & Riordan, Michael H, 1984. "Advertising as a Signal," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 427-450, June.
    4. Gene M. Grossman & Carl Shapiro, 1984. "Informative Advertising with Differentiated Products," Review of Economic Studies, Oxford University Press, vol. 51(1), pages 63-81.
    5. Moraga-Gonzalez, Jose Luis, 2000. "Quality uncertainty and informative advertising," International Journal of Industrial Organization, Elsevier, vol. 18(4), pages 615-640, May.
    6. Meurer, Michael & Stahl, Dale II, 1994. "Informative advertising and product match," International Journal of Industrial Organization, Elsevier, vol. 12(1), pages 1-19, March.
    7. Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-754, July/Aug..
    8. Simon P. Anderson & Regis Renault, 1999. "Pricing, Product Diversity, and Search Costs: A Bertrand-Chamberlin-Diamond Model," RAND Journal of Economics, The RAND Corporation, vol. 30(4), pages 719-735, Winter.
    9. Ron Shachar & Bharat N. Anand, 1998. "The Effectiveness and Targeting of Television Advertising," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(3), pages 363-396, September.
    10. Gerard R. Butters, 1977. "Equilibrium Distributions of Sales and Advertising Prices," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 465-491.
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    More about this item

    Keywords

    Information Disclosure; Tune-ins; Uncertainty; Sampling; Signaling.;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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