Information design through scarcity and social learning

We show that a firm may benefit from strategically creating scarcity for its product, in order to trigger herding behaviour consumers situations where such is otherwise unlikely. consider setting with social learning, observe sales previous cohorts and update beliefs about product quality before making their purchase. Imposing capacity constraint directly limits but also makes information coarser consumers, who react favourably sell-out because they infer only demand must exceed capacity. Consumer learning then limited even large unbounded private signals, the acts influence consumers' environment. Our results suggest suitable environments constraints can serve as useful tool implement optimal design practice: if signals are not too precise be changed over time, markets firm's choice of delivers same expected Bayesian persuasion solution.