78 Pages Posted: 26 Jan 2017
Date Written: January 26, 2017
Many countries regulate the quality of food and drugs, yet it remains unclear whether markets can be relied upon to deliver high quality in the absence of regulation, notably where companies can advertise the superior quality of their products. We present evidence from two field experiments in China's infant formula industry, which has seen a trust crisis after several safety scandals. We show that disclosure of information about product quality can have a negative impact on consumers' purchase decisions and self-reported trust in the industry, as information reminds consumers of past scandals and draws their attention to safety risks.
Keywords: Information Disclosure, Behavioral Economics, Development Economics, Randomized Control Trial, Product Safety, China
JEL Classification: D03, D12, I15, I18, M31
Suggested Citation: Suggested Citation
Ma, Juan and Wang, Zhaoning and Khanna, Tarun, Why Advertising Safety Isn't Safe? Reminder Effect and Consumers' Negative Response to Information about Product Quality (January 26, 2017). INSEAD Working Paper No. 2017/08/STR/EMI. Available at SSRN: https://ssrn.com/abstract=2906179 or http://dx.doi.org/10.2139/ssrn.2906179