2013, forthcoming Marketing Science
Archishman Chakraborty, Rick Harbaugh
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 tradeoff of not talking up another potential strength. Puffery pulls in buyers who value product attributes that are talked up or emphasized, while pushing away other buyers who infer that the attributes they value are not the product's strengths. When the initial probability of a sale is low there are more potential buyers to pull in than to push away so puffery is persuasive. This persuasiveness requires some buyer privacy about their preferences so that the seller does not completely pander to them. More generally the results show how cheap talk by an expert to a decision maker can be credible and persuasive in standard discrete choice models used throughout marketing and economics.
Chakraborty, Archishman and Rick Harbaugh (2013), “Persuasive Puffery”, forthcoming, Marketing Science.
Persuasive Puffery (398 KB)