> For example, there is no cost to the advertising firm for promoting blatantly incorrect or dangerous statements that must latter be corrected through costly education.
I disagree somewhat, as there is certainly a regulatory cost. Now whether FINRA is stringent enough is an entirely different question, and one that would be more fruitful to discuss.
Moreover, you'll see toward the bottom of my original comment that I don't think misleading advertising is a good thing. My comment mostly dealt with the author's discussion of consumer attention as a resource, to which I strongly disagree that there are externalities.
> Advertising is not an issue of prisoner's dilemma (in which two players who benefit from cooperation are driven instead by rationality towards destructive outcomes).
I defined cooperation to be a firm not advertising and defection to be a firm advertising. It certainly seems like the definition of a prisoner's dilemma to me under the way I'd set it up. But we're free to disagree. I agree that this is an asymmetrical information issue, but that quite literally applies to the entire business world.
I disagree somewhat, as there is certainly a regulatory cost. Now whether FINRA is stringent enough is an entirely different question, and one that would be more fruitful to discuss.
Moreover, you'll see toward the bottom of my original comment that I don't think misleading advertising is a good thing. My comment mostly dealt with the author's discussion of consumer attention as a resource, to which I strongly disagree that there are externalities.
> Advertising is not an issue of prisoner's dilemma (in which two players who benefit from cooperation are driven instead by rationality towards destructive outcomes).
I defined cooperation to be a firm not advertising and defection to be a firm advertising. It certainly seems like the definition of a prisoner's dilemma to me under the way I'd set it up. But we're free to disagree. I agree that this is an asymmetrical information issue, but that quite literally applies to the entire business world.