This three-year award in support of U.S.-France collaborative research in economics involves Simon P. Anderson of the University of Virginia and Regis Renault at the Universite de Toulouse (Universite des Sciences Sociales). They propose to conduct research on a framework (model) to analyze the incentives for firms to use advertisement for informing the consumer about product characteristics and/or price information. This model extends their previous work on consumer research and firm pricing for differentiated products where consumers have differential prior information on products. The US investigator brings to this collaboration expertise on consumer choice modeling. This is complemented by French expertise in game theory and economics of information. Their collaboration will advance understanding of the incentives for firms to provide two types of advertising (price and characteristics), the welfare properties of the market solution, the biases induced by the market system, and possible corrective mechanisms.
