“Vaporware” by Jae NAHM
Hong Kong University of Science and Technology
Jay Pil CHOI
Michigan State University
Eirik Gaard KRISTIANSEN
It is a widely adopted practice for firms to announce new products well in advance of actual market availability, especially in the computer industry. In this paper, a firm makes pre-announcements on its product, which are ‘cheap talk.’ We develop a reputation model of vaporware where the product pre-announcement can convey information about the product’s quality. Also, we discuss its implications for social welfare.