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 restaurant can earn repeat business from you.-Eating at the local restaurant still presents a moral hazard problem. Once you are seated, the restaurant can treat you poorly with a lower risk of your leaving.

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