BAIT AND SWITCH

Sellers sometimes practice a form of false advertising known as bait a nd switch. A low-priced good is advertised but replaced by a different good at the showroom. The practice is surprising since advertising th e wrong good discourages the appropriate buyers from shopping, attract ing customers who will be disappointed when they see the good. Firms b ait and switch to draw a greater number of shoppers. The cost is that some who would have bought the good that is for sale may not bother to look. Under a variety of conditions, bait and switch is a profitable strategy resulting in a fully rational equilibrium with false advertis ing.