Persuasive Advertising with Sophisticated but Impressionable Consumers

Abstract

I propose a model in which consumers base their purchasing decisions upon their recollections of product quality, and in which firms can use persuasive advertising to change these recollections. Although consumers are aware that such advertising has occurred when updating their beliefs, they cannot prevent their memories from being affected. I show that persuasive advertising may be used even though consumers are fully aware of it, and that persuasive advertising does not necessarily signal high-quality products. The model is extended to incorporate informative advertising in which firms reveal some verifiable information. When firms choose between persuasive and informative advertising, persuasive advertising may block the full unraveling of information.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 8 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.