The recent Maggi-government row in India shows how advertising can often be misleading. This paper by Anita Rao and Emily Wang aims to measure the impact of false claims on consumer demand and understand which type of consumer is most impacted. The paper finds that false claims can have a significant impact on consumer demand from the evidence that termination of these claims led to a decline in consumer demand. New buyers are the most impacted by false claims and persist in their purchases even after the misleading claims have been removed.
Title: Demand for ‘Healthy’ Products: False Claims in Advertising
Source: Social Science Research Network