Experimental Study of Consumer Responses to Different Sources of Information about Prescription Drugs

62 Pages Posted: 30 Oct 2020

See all articles by Jacob Byl

Jacob Byl

Western Kentucky University

W. Kip Viscusi

Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - College of Arts and Science - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

Date Written: October 28, 2020

Abstract

Consumers receive risk information about prescription drugs from many sources, including from largely unregulated attorney advertisements. This experiment measures subjective risk beliefs about prescription drugs and subjects’ drug-taking behavior in an incentivized setting. Results of the experiment are used to estimate a Bayesian learning model to ascertain the risk levels implied by different information sources and the informational weights subjects place on these sources. Even after people have received scientifically based drug risk information from a doctor and product label, attorney litigation advertising boosts risk beliefs about side effects by an average of 16 out of 100 cases, which is roughly a 50% increase over baseline risk beliefs. Risk beliefs have a significant effect on drug-taking behavior in an incentivized environment. Experience with taking the drug also feeds back into the learning process about risk beliefs. Our experimental results help formalize how consumers update risk beliefs and suggest ways to encourage a learning environment that avoids alarmist updating based on information sources like attorney advertising.

Keywords: risk updating, experimental, Bayesian learning, attorney advertising, litigation advertising, direct-to-consumer advertising, prescription drugs

JEL Classification: D12, D81, K2, I12, I18, D90

Suggested Citation

Byl, Jacob and Viscusi, W. Kip, Experimental Study of Consumer Responses to Different Sources of Information about Prescription Drugs (October 28, 2020). Journal of Economic Behavior and Organization, Forthcoming, Vanderbilt Law Research Paper No. 20-55, Available at SSRN: https://ssrn.com/abstract=3720869 or http://dx.doi.org/10.2139/ssrn.3720869

Jacob Byl

Western Kentucky University ( email )

1 Big Red Way
Bowling Green, KY 42101-3576
United States

W. Kip Viscusi (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
615-343-7715 (Phone)
615-322-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/bio/?pid=w-kip-viscusi

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Vanderbilt University - College of Arts and Science - Department of Economics

Box 1819 Station B
Nashville, TN 37235
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://as.vanderbilt.edu/economics/bio/wkip-viscusi/

Vanderbilt University - Owen Graduate School of Management

401 21st Avenue South
Nashville, TN 37203
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://business.vanderbilt.edu/bio/w-kip-viscusi/

Vanderbilt University - Strategy and Business Economics

Nashville, TN 37203
United States

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