This paper analyzes a monopolist that markets successive generations of new and improving nondurable products. Prices, research intensity, and product innovations are derived as sequential equilibrium outcomes to a dynamic game with incomplete information. Asymmetric information is an important feature of the model. The monopolist is fully aware of the current product's quality, as are consumers who have tried it. However, the beliefs of other people are characterized by a probability distribution that depends on the monopolist's marketing strategy and the product's popularity. The analysis illustrates a new context in which price signaling might serve as a mechanism for ensuring that only high-quality products are marketed. More important, it shows how product life cycles are generated in the absence of signaling and how a reputation for producing high-quality goods becomes established in such cases.

This paper analyzes a monopolist that markets successive generations of new and improving nondurable products. Prices, research intensity, and product innovations are derived as sequential equilibrium outcomes to a dynamic game with incomplete information. Asymmetric information is an important feature of the model. The monopolist is fully aware of the current product's quality, as are consumers who have tried it. However, the beliefs of other people are characterized by a probability distribution that depends on the monopolist's marketing strategy and the product's popularity. The analysis illustrates a new context in which price signaling might serve as a mechanism for ensuring that only high-quality products are marketed. More important, it shows how product life cycles are generated in the absence of signaling and how a reputation for producing high-quality goods becomes established in such cases.

This paper presents a model of job matching the generalizes the existing literature by allowing for different jobs types, or occupations. Such differences affect the value of job-specific experience, inducing a career profile where certain types are sampled before others. More specifically, the analysis shows that it is optimal for the young and inexperienced to gravitate toward jobs exhibiting a certain kind of risk. Then, after deriving the equilibrium job turnover rate for an economy in which people do not switch occupations, panel data are used to estimate its underlying parameters. The hypothesis that people do not switch occupations is rejected against the alternative that they do, thus providing empirical support for the theoretical extension undertaken here.

This paper presents a model of job matching the generalizes the existing literature by allowing for different jobs types, or occupations. Such differences affect the value of job-specific experience, inducing a career profile where certain types are sampled before others. More specifically, the analysis shows that it is optimal for the young and inexperienced to gravitate toward jobs exhibiting a certain kind of risk. Then, after deriving the equilibrium job turnover rate for an economy in which people do not switch occupations, panel data are used to estimate its underlying parameters. The hypothesis that people do not switch occupations is rejected against the alternative that they do, thus providing empirical support for the theoretical extension undertaken here.