The Risk Reduction Role of Advertising

  title={The Risk Reduction Role of Advertising},
  author={Dmitri Byzalov and Ron Shachar},
  journal={Quantitative Marketing and Economics},
This study shows theoretically and empirically that exposure to advertising increases consumers’ tendency to purchase the promoted product because the informative content of advertising resolves some of the uncertainty that the risk averse consumers face and thus reduces the risk associated with the product. We call this effect the “risk-reduction” role of advertising. The risk-reduction model implies that advertising effectiveness depends on (a) the risk preference parameter, (b) the precision… 
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