Finite Optimal Penalties for False Advertising
研究了企业拥有不可验证的私人信息时，监管者如何设定虚假广告惩罚。发现最优惩罚是有限的，允许均衡中存在一些虚假宣传，而非无限高惩罚。
I consider a setting in which firms have unverifiable private information about their type, which corresponds to their probable product quality; firms can expend a learning cost in order to observe their quality; and the regulator can enforce false advertising penalties contingent only on verifiable realized quality. I show that it may be socially optimal for high type firms to signal their type through ‘speculative claims,’ rather than to learn and signal their quality . This implies that socially optimal false advertising penalties are finite, in contrast to the literature's common assumption of arbitrarily high false advertising penalties, and that the regulator optimally tolerates the existence of some false claims in equilibrium.