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Persuasive Puffery

Author

Listed:
  • Archishman Chakraborty

    () (Syms School of Business, Yeshiva University, New York, New York 10033)

  • Rick Harbaugh

    () (Kelley School of Business, Indiana University, Bloomington, Indiana 47405)

Abstract

Sellers often make claims about product strengths without providing evidence. Even though such claims are mere puffery, we show that they can be credible because talking up any one strength comes at the implicit trade-off of not talking up another potential strength. Puffery pulls in some buyers who value product attributes that are talked up or emphasized while pushing away other buyers who infer that the attributes they value are relative weaknesses. When the initial probability of making a sale is low, there are more potential buyers to pull in than to push away, so puffery is persuasive overall. This persuasiveness requires that buyers have some privacy about their preferences so that the seller does not completely pander to them. More generally, the results show how comparative cheap talk by an expert to a decision maker can be credible and persuasive in standard discrete choice models used throughout marketing, economics, and other disciplines.

Suggested Citation

  • Archishman Chakraborty & Rick Harbaugh, 2014. "Persuasive Puffery," Marketing Science, INFORMS, vol. 33(3), pages 382-400, May.
  • Handle: RePEc:inm:ormksc:v:33:y:2014:i:3:p:382-400
    DOI: 10.1287/mksc.2013.0826
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    File URL: http://dx.doi.org/10.1287/mksc.2013.0826
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    Other versions of this item:

    • Archishman Chakraborty & Rick Harbaugh, 2012. "Persuasive Puffery," Working Papers 2012-05, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.

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    Citations

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    Cited by:

    1. Ian Jewitt & Daniel Z. Li, 2017. "Cheap Talk Advertising in Auctions: Horizontally vs Vertically Differentiated Products," Working Papers 2017_03, Durham University Business School.
    2. Wonsuk Chung & Rick Harbaugh, 2012. "Biased Recommendations," Working Papers 2012-02, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    3. Maarten C. W. Janssen & Mariya Teteryatnikova, 2017. "Mystifying but not misleading: when does political ambiguity not confuse voters?," Public Choice, Springer, vol. 172(3), pages 501-524, September.

    More about this item

    Keywords

    cheap talk; sales talk; comparative advertising; negative advertising; unique selling point; targeting; privacy; pandering;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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