Snowed: Deceptive Advertising by Ski Resorts
32 Pages Posted: 30 Jun 2009
Date Written: June 29, 2009
Casual empiricism suggests that deceptive advertising is prevalent, and several classes of theories explore its causes and consequences. We provide some unusually sharp empirical evidence on the extent, mechanics, and dynamics of deceptive advertising. Ski resorts self-report 23 percent more snowfall on weekends; there is no such weekend effect in government precipitation data. Resorts that plausibly reap greater benefits from exaggerating do it more. We find little evidence that competition restrains or encourages exaggeration. Near the end of our sample period, we observe a shock to the information environment: a new iPhone application feature makes it easier for skiers to comment on resort ski conditions in real time. Exaggeration falls sharply, especially at resorts where iPhones can get reception.
Keywords: false advertising, misleading advertising, bait and switch, search costs, quality disclosure, product information, Internet
JEL Classification: D83, M37, K29, L50, L83
Suggested Citation: Suggested Citation