Debunking Misinformation in Advertising

61 Pages Posted: 8 Jul 2021 Last revised: 6 Dec 2021

See all articles by Jessica Fong

Jessica Fong

University of Michigan Ross School of Business

Tong Guo

Duke University, Fuqua School of Business

Anita Rao

University of Chicago - Booth School of Business

Date Written: June 23, 2021

Abstract

The prevalence of misinformation in advertising has spurred various interested parties – regulators, the media and competing firms - to debunk false claims in the marketplace. This paper studies whether such debunking messages provided by these parties can reduce the impact of misinformation on consumer purchase behavior. If so, does debunking effectively change consumers' misbeliefs - an ideal outcome from a policy-maker's perspective - or does it merely reinforce correct beliefs, as predicted by biased Bayesian updating? With theory providing contradictory predictions, we design and implement a conjoint experiment that enables us to measure willingness-to-pay under exposure to real-world misinformation and debunking messages. Focusing on three ingredients in product categories where misinformation is prevalent (aluminum in deodorants, fluoride in toothpastes, and GMOs in food), we find that debunking plays an important role in mitigating the impact of misinformation. Debunking can repair the decrease in willingness-to-pay caused by misinformation by correcting misinformed beliefs, a promising finding for policymakers aiming to correct such misbeliefs in the marketplace. We discuss the incentives for firms to debunk or introduce new products that conform to misinformation.

Keywords: debunking, misinformation, deceptive advertising, social media, beliefs, conjoint, policy

JEL Classification: M31, M37, M38, L1, L15, I18, D83,D84

Suggested Citation

Fong, Jessica and Guo, Tong and Rao, Anita, Debunking Misinformation in Advertising (June 23, 2021). Available at SSRN: https://ssrn.com/abstract=3875665 or http://dx.doi.org/10.2139/ssrn.3875665

Jessica Fong (Contact Author)

University of Michigan Ross School of Business ( email )

701 Tappan Ave
Ann Arbor, MI 48109
United States

Tong Guo

Duke University, Fuqua School of Business ( email )

100 Fuqua Dr
Durham, NC 27708
United States

Anita Rao

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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