You are driving on a trip and have two choices on the highway to stop for a snack: a well$-$known chain or a local restaurant that you have never heard of but that looks okay.

What lessons from this chapter might lead you to choose the chain even if you think that their food is just average?

The chain has a stronger incentive to maintain its reputation than the local place$-$you are likely to encounter another instance of the chain elsewhere, but the local restaurant will get you to buy at most one meal there.

Eating at the local restaurant presents an adverse selection problem. The owners of the local restaurant could have bought a franchise instead of operating independently, but their management skills are clearly insufficient for the chain's standards.

That the local restaurant is still local and not a chain is a signal that the local restaurant is worse than the chain. If the local restaurant were a better establishment, it is reasonable to expect it to grow to more than one location.

Eating at the local restaurant presents a moral hazard problem. Once you are seated, the local restaurant can treat you poorly and it is likely you will not leave.

How might you choose differently if you had access to the Internet?

Potential diners having Internet access gives the local restaurant a stronger incentive to maintain a good reputation. You may be able to only dine there once, but you are still able to leave a bad review if the restaurant does not meet expectations.

Having access to the Internet enables you to gather more information by reading reviews, but since most reviews would be from local diners, the signals would be less useful to you as an outsider.

Internet access would not change the information relevant to the decision of where to eat. The logic in the previous part stands.

How might you choose differently if these two choices were in your neighborhood?

As a local yourself, you know that the best restaurants are always located on the highways.

The local restaurant now has an equally strong motive to maintain a good reputation with you. Like the chain, the local