Evidence on the Effects of Mandatory Disclaimers in Advertising

18 Pages Posted: 2 Apr 2012 Last revised: 14 Aug 2015

See all articles by Kesten C. Green

Kesten C. Green

University of South Australia - UniSA Business School; Ehrenberg-Bass Institute for Marketing Science

J. Scott Armstrong

University of Pennsylvania - Marketing Department

Date Written: March 30, 2012

Abstract

Disclaimers are widely used by firms to warn customers of dangers and limitations of their products, and are persuasive when the issue is important. We examine the effects of mandatory disclaimers.

Speech restrictions conflict with basic economic incentives. Sellers are motivated by profit to benefit consumers. Government officials lack this motive, and may be tempted by personal beliefs or by pressure from competing suppliers, or other lobbyists, to cause harm. We found that the imposition of mandatory disclaimers in the U.S. has been on the basis not of scientific studies that they would further important government interests but of opinions that they would do so.

Our review of 15 experimental studies found that mandatory disclaimers increased confusion in all cases. All of the 11 of the studies that examined decision making found that consumers made poorer decisions. We were unable to find evidence that consumers have benefited from mandatory disclaimers in any situation.

We conducted an experiment on the effects of a disclaimer for a Florida court case. Two advertisements for dentists offering implant dentistry were shown to 317 subjects. One advertiser had implant dentistry credentials. Subjects exposed to the disclaimer, especially women and the less educated, more often recommended the advertiser who lacked credentials. In addition, the subjects drew false and damaging inferences about the credentialed dentist.

Keywords: consumer protection, corrective advertising, decision making, government regulation, judgment

JEL Classification: D11, D12, D18, D21, D78, D8, K23, K32, L21, L51, M14, M31, M37, O31, P11

Suggested Citation

Green, Kesten C. and Armstrong, J. Scott, Evidence on the Effects of Mandatory Disclaimers in Advertising (March 30, 2012). Available at SSRN: https://ssrn.com/abstract=1971221 or http://dx.doi.org/10.2139/ssrn.1971221

Kesten C. Green

University of South Australia - UniSA Business School ( email )

GPO Box 2471
Adelaide, SA 5001
Australia
+61 8 83012 9097 (Phone)

HOME PAGE: http://people.unisa.edu.au/Kesten.Green

Ehrenberg-Bass Institute for Marketing Science ( email )

Australia

HOME PAGE: http://www.marketingscience.info/people/KestenGreen.html

J. Scott Armstrong (Contact Author)

University of Pennsylvania - Marketing Department ( email )

700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States
215-898-5087 (Phone)
215-898-2534 (Fax)

HOME PAGE: http://marketing.wharton.upenn.edu/people/faculty/armstrong.cfm

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