Economics Research Seminar | Weatherhead

Economics Research Seminar

Assisting Self-Persuasion: A Motivated Preference Theory of Advertising

Abstract: I develop a new theory of persuasive advertising, in which consumers rationally seek to improve their attitude toward the products they choose, and advertising facilitates such ad-justment. Persuasive advertising by competing firms provides additive benefits to consumers and so is not per se wasteful, but private incentives with respect to the level of advertising do not generally align with social welfare optimization. The price e?ect of advertising has two components, one arising from the easing of adjustment for all consumers, and the other from di?erential e?ects on consumers that accrue to targeting. When targeting is more precise, firms are better able to raise prices without sacrificing sales, whence they capture a greater share of the returns to advertising and so increase advertising expenditures. The market-delivered quantity of advertising rises relative to the social optimum with both the precision of targeting and the density of consumers at the margin between competitors.

Please join the Economics Department for a research seminar.  This event is open to all Case Western Reserve University faculty, Ph.D. students, economic majors and minors, and those interested in economics research.

Contact Information:
Teresa Kabat 
teresa.kabat@case.edu 
216.368.4110

Friday, Oct. 11, 2019 from 12:30 p.m. to 2 p.m.
Peter B. Lewis Building
11119 Bellflower Road
Cleveland, OH 44106-7235
United States
Speaker(s): Matthew G. Nager, Ph.D., City College of New York
Sponsored by: Economics Department
Nagler Paper

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