Gojiberries personal blog

Advertising without signal: The rise of the grifter equilibrium

by Gaurav gojiberries.io published 2025-07-155 min read

Economists credit ads with two welfare‑enhancing roles: 1. Informative – trimming search costs (Stigler 1961 (pdf)). 2. Signaling – In classic models, high-quality sellers are more willing to incur large, sunk ad costs because they expect to recoup them through future sales, especially in experience-good markets where…

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