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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

Juan Ma

INSEAD

Zhaoning Wang

Analysis Group, Inc.; Harvard University - Department of Economics

Tarun Khanna

Harvard University - Strategy Unit

Date Written: October 20, 2017

Abstract

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

Ma, Juan and Wang, Zhaoning and Khanna, Tarun, Why Advertising Safety Isn’t Safe? Reminder Effect and Consumers’ Responses to Product Quality Information (October 20, 2017). INSEAD Working Paper No. 2017/69/STR/EMI. Available at SSRN: https://ssrn.com/abstract=2906179 or http://dx.doi.org/10.2139/ssrn.2906179

Juan Ma (Contact Author)

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Zhaoning Wang

Analysis Group, Inc. ( email )

111 Huntington Avenue
Tenth Floor
Boston, MA 02199
United States
617-425-8204 (Phone)

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

Tarun Khanna

Harvard University - Strategy Unit ( email )

Harvard Business School
Boston, MA 02163
United States
617-495-6038 (Phone)
617-495-0355 (Fax)

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