Choosing one's identity

Abstract

This paper has two parts: In the first part, it presents a way of formalizing identity choice issues. In the main part, it looks at the incentive firms have to differentiate themselves by means of choosing meaningless, worthless 'tags' in the absence of exogenous rules preventing them from imitating each other. It shows that even when one can find a. ranking of firms' products (from worse to better sell), 'endogenous' differentiation of this sort might result. A crucial factor in obtaining this result is that not all buyers should be able to observe all tags in the same way, i.e., that observability conditions should vary across buyers.