Persuasive Puffery

Forthcoming, Marketing Science

40 Pages Posted: 24 Oct 2012 Last revised: 13 May 2014

See all articles by Archishman Chakraborty

Archishman Chakraborty

York University - Schulich School of Business

Rick Harbaugh

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy; Indiana University - Department of Economics

Date Written: October 24, 2012

Abstract

Sellers often make explicit or implicit product claims without providing evidence. We show that such "puffery" of product attributes through pure cheap talk can be credible and help buyers make a better decision. Puffing one attribute of a product leads buyers to positively update their impression of the product on that attribute, but also to negatively update their impression of the product on other attributes. Such updating pulls in buyers who value the puffed attribute, but pushes away other buyers who value other attributes. When the initial probability of a sale is low, there are more buyers to pull in than to push away, so the seller benefits from puffery. The legal distinction that permits puffery about subjective claims, but precludes puffery about objective facts, is shown to be consistent with the differences between cheap talk and persuasion models of communication.

Keywords: cheap talk, sales talk, comparative advertising, negative advertising, unique selling point, privacy

JEL Classification: D82, L15, C72, D72

Suggested Citation

Chakraborty, Archishman and Harbaugh, Rick, Persuasive Puffery (October 24, 2012). Forthcoming, Marketing Science. Available at SSRN: https://ssrn.com/abstract=2166426 or http://dx.doi.org/10.2139/ssrn.2166426

Archishman Chakraborty

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

HOME PAGE: http://www.yorku.ca/archish/

Rick Harbaugh (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States
812-855-2777 (Phone)
812-855-3354 (Fax)

HOME PAGE: http://www.bus.indiana.edu/riharbau/

Indiana University - Department of Economics ( email )

Wylie Hall
Bloomington, IN 47405-6620
United States

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