Reading list: advertising atypical results

Ahmed E. Taha, Selling the
Outlier
, forthcoming in the Journal of Corporation Law.
 
Advertisements for products ranging
from weight-loss programs to mutual funds regularly feature the results of
people who have used the product. 
However, these advertisements often present the results only of people
who had an atypically positive experience. 
These advertisements harm consumers and investors, who greatly
underestimate the advertised results’ atypicality.  Because advertisements of past results are
used in a wide range of products, they are regulated by a number of federal
agencies.  These agencies have taken
different regulatory approaches to advertisements of atypical results,
primarily requiring them to include additional disclosures.  This article presents evidence that these and
other disclosures cannot prevent advertisements of atypical results from
deceiving consumers and investors. 
Indeed, the very purpose of these advertisements is to mislead people
regarding their own likely results. 
Thus, in light of the harm these advertisements cause and the minimal
useful information they provide, the prohibition of advertisements of atypical
results should be seriously considered.
 
Good overview of the empirical evidence that testimonials
about top experience distort consumer understanding, and that disclosures of
atypicality generally don’t work because of various cognitive biases and
innumeracy.  Taha would prefer to ban advertising
atypical results at all; is there any room in that for Subway’s Jared
commercials touting extreme weight loss?

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