No Death of a Buyerman
Do ads bias beliefs? Many think so, and want to regulate ads. And yes, many ads don’t seem to offer much useful info. Here are four ad theories:
Exploiting bias – the small leaks of our ancestors’ biases are now torn into gaping holes.
Burning money – a company willing to waste money on ads signals confidence in its product.
Identity – ads associate a product with a personal style, with which people want to identify.
Hidden info – if you look closely, you will see that ads do in fact have lots of useful info.
Here is important clue: Every transaction has both a buyer and a seller. Yet we hear much more about salesmen, and how to sell, than we do about buyermen and how to buy. There are few thoughtful plays about "The Death of a Buyerman" or books on "How to be won as a friend and influenced by people." Why?
Buyers are usually more uncertain about their value than sellers are about their cost. So both sides tend to talk about buyer value. Thus to the extent that individual ability is relevant, whether a sale happens is more clearly a signal of seller ability than of buyer ability. This suggests a fifth ad theory:
5. Seller signaling – buyers and others like to see and affiliate with impressive sellers.
Just as we like to see and affiliate with sports stars, musicians, actors, writers, and professors, we like to see and affiliate with people who have impressive abilities associated with sales. Watching ads or listening to a salesman’s pitch may be like watching a sports star, and buying a salesman’s product may be like getting a star’s signature or t-shirt.
Under this theory, we need no bias to want to watch ads that tell us little about a product, and then buy that product. There might still be reasons to regulate such ads, but they would not be reasons of bias.
Eliezer, social psychologists may prefer to explain ad effectiveness in terms of the biases that they study, but economists are not so sure. And it is not clear incentives are asymmetric.
Is a critic a kind of specialized buyer?
Also, perhaps "super sellers" - those that are more effective at getting people to buy products for more money - actually add value for the buyer by finding the buyer a product that better fits their preferences, even if they might end up paying more than they otherwise would have? If I knew exactly what car I wanted, all I'd have to do is look for the "best deal." If I knew that I wanted a car but didn't know which one, a "super salesman" might be more useful than a poor one.