Why Advertising Safety Isn’t Safe? Reminder Effect and Consumers’ Responses to Product Quality Information
56 Pages Posted: 26 Jan 2017 Last revised: 28 Oct 2017
Date Written: October 20, 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 the disclosure of information about product quality have a non-positive or even significantly 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 potential 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