How Do Restrictions on Advertising Affect Consumer Search?

Lesley Chiou () and Catherine E. Tucker ()
Additional contact information
Lesley Chiou: Economics Department, Occidental College, Los Angeles, California 90041
Catherine E. Tucker: MIT Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142

Management Science, 2022, vol. 68, issue 2, 866-882

Abstract: Advertising is often criticized for presenting only partial or selective information about products. This criticism is particularly pronounced for health products, where large asymmetries in information may exist between consumers and firms. This paper explores how government restrictions designed to prevent selective advertising affect the types of information to which consumers are exposed. We exploit a natural experiment in the form of a U.S. Food and Drug Administration (FDA) crackdown that prevented pharmaceutical companies from using selectively chosen information in their Internet search ads. Because companies could not adequately document side effects within the advertising space allowed, they removed their ads. Our results suggest that, after the ads were removed, consumers were more likely to seek information from websites based on user-generated content or websites that focused on medical treatments not regulated by the FDA, such as Canadian pharmacies and sites promoting herbal remedies.

Keywords: search advertising; pharmaceuticals; advertising regulation (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2021.3980 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:2:p:866-882

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().