Ads as Cues" with Pedro Bordalo, Giovanni Burro, G ad Nacamulli and Andrei Shleifer
Abstract:
We present and test a model in which, as in Bordalo et al. (2020), a consumer is more likely to demand a good if she recalls the pleasure it gave her in the past. Following memory research, recall is more likely for goods that are frequent and similar to cues, subject to interference from o ther experiences. The model delivers brand habits and ads that affect deman d by working as cues. It predicts that ads: i) are more effective for more habitual consumers and ii) exhibit spillovers within and across product cat egories, driven by similarity. We find robust support for these predictions using data from NielsenIQ and Nielsen, which proxies for households’ past consumption, exposure to the ads of different brands, and similarity betwee n ads. Memory offers new insights on how advertising affects market competi tion and consumer welfare.
DTSTAMP:20260415T013852Z DTSTART:20251002T163000Z DTEND:20251002T180000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR