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Advertising, learning, and consumer choice in experience good markets: an empirical examination*
Author(s) -
Ackerberg Daniel A.
Publication year - 2003
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/1468-2354.t01-2-00098
Subject(s) - advertising , value (mathematics) , consumer welfare , prestige , empirical research , empirical examination , consumer choice , economics , welfare , marketing , microeconomics , business , computer science , linguistics , philosophy , epistemology , machine learning , classical economics , market economy
This article empirically analyzes different effects of advertising in a nondurable, experience good market. A dynamic learning model of consumer behavior is presented in which I allow both “informative” effects of advertising and “prestige” or “image” effects of advertising. This learning model is estimated using consumer level panel data tracking grocery purchases and advertising exposures over time. Empirical results suggest that in this market, advertising's primary effect was that of informing consumers. The estimates are used to quantify the value of this information to consumers and evaluate the welfare implications of an alternative advertising regulatory regime.