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Indiana University Bloomington

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Journal Articles

Understanding Responses to Contradictory Information about Products

2011, Marketing Science

Ajay Kalra, Shibo Li, Wei Zhang

Abstract

While prior literature has examined reactions to drastic negative news, we examine the situation how decision makers receive contradictory information about products where they have to decide whether to persist or abandon product usage.  We investigate physician reactions to conflicting information concerning cardiovascular risk of Avandia, a diabetes drug.  We examine how beliefs both about drug effectiveness and drug safety are updated speculating that experience, expertise and self-efficacy impacts how such information is integrated with current quality beliefs.  Unlike previous Bayesian learning models, we consider that some signals like positive and negative news releases and the firm’s marketing effort may be biased in that they provide an opinionated point of view.  The results show interesting differences in how physician types (specialists, hospital-based PCPs, heavy and light prescribers) update their beliefs and information sources they use to do so.  We find evidence that safety issue about Avandia resulted in spillover concern to close competitor Actos.  The results have implication for determining who should be targeted and what vehicles should be used if a firm is faced with a situation where consumers are in a quandary due to receiving conflicting messages.

Citation

Kalra, Ajay, Shibo Li, and Wei Zhang (2011), “Understanding Responses to Contradictory Information about Products,” Marketing Science, Vol. 30, No. 6, 1098-1114.

Keywords

Contradictory Information, Learning Models, Pharmaceutical Markets, Endogeneity, Hierarchical Bayes Models