Lessons From an Oops at Consumer Reports®: Consumers Follow Experts; Ignore Invalid Information

34 Pages Posted: 26 Nov 2008 Last revised: 8 May 2012

See all articles by Uri Simonsohn

Uri Simonsohn

Ramon Llull University - ESADE Business School

Date Written: January 25, 2010

Abstract

In 2007 Consumer Reports released, and two weeks later retracted, a flawed report on the safety of infant carseats. Analyzing data from 5,471 online auctions for carseats ending before, during and after the information was considered valid I find that (1) consumers responded to the new information, and –more interestingly- that (2) they promptly ceased to do so once it was retracted. This first finding, thanks to the random nature of the flawed ratings, demonstrates that expert advice has a causal effect on consumer demand. The second finding suggests that people’s inability to willfully ignore information is not as extreme as the experimental evidence in the psychological literature would suggest.

Keywords: Behavioral Economics, maketplace, consumer behavior, heuristics and biases, hindsight bias, curse of knowledge

Suggested Citation

Simonsohn, Uri, Lessons From an Oops at Consumer Reports®: Consumers Follow Experts; Ignore Invalid Information (January 25, 2010). Available at SSRN: https://ssrn.com/abstract=1307263 or http://dx.doi.org/10.2139/ssrn.1307263

Uri Simonsohn (Contact Author)

Ramon Llull University - ESADE Business School ( email )

Avinguda de la Torre Blanca, 59
Sant Cugat del Vallès, 08172
Spain

HOME PAGE: http://urisohn.com

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