A rm launches a new product. With probability p the product is of high quality, and with probability 1 p it is of low quality. A consumer gets v if they buy the good of high quality, 0 if the quality is low. The consumer does not know the quality of the good before purchasing, but learn it if and when they rst buy it. The rm stays on the market for an innite number of periods. In each period a consumer can choose to buy one unit of the good or not. For simplicity the consumer is assumed to have a discount rate of 0. The rm sells the good at a xed price p = v s, where s is small, in each period. It can also decide to spend M euros on advertising in the rst period. Advertising has no direct impact on the consumers' preferences and willingness to pay for the good, but consumers can observe it and see it costs M. The rm's discount factor is 6