  Consumers often resort to third-party information such as word of mouth,
testimonials and reviews to learn more about the quality of a new product.
However, it may be difficult for consumers to assess the precision of such
information. We use a monopoly setting to investigate how the precision of
third-party information and consumers' ability to recognize precision impact
firm profits. Conventional wisdom suggests that when a firm is high quality, it
should prefer a market where consumers are better at recognizing precise
signals. Yet in a broad range of conditions, we show that when the firm is high
quality, it is more profitable to sell to consumers who do not recognize
precise signals. Given the ability of consumers to assess precision, we show a
low quality firm always suffers from more precise information. However, a high
quality firm can also suffer from more precise information. The precision range
in which a high quality firm gains or suffers from better information depends
on how skilled consumers are at recognizing precision.
