Hanson and Kysar—Market Manipulation

Hanson and Kysar
"Taking Behavioralism Seriously: Some Evidence of the Problem of Market Manipulation"
(1999)

[1426] Rather than simply
[1427]
asking how a particular anomaly will influence the typical consumer, the more probative question is how the presence of cognitive anomalies will influence all actors in the market. With that distinction in mind, we explained that manufacturers have every incentive to utilize cognitive biases to lower consumer appreciation of product risks. Such manipulation, we argued, is simply another form of cost externalization, a practice that manufacturers naturally pursue in an effort to avoid costs and increase profit margins. We noted also that this manipulation of consumer perceptions should occur whether or not manufacturers are cognizant of it. That is, the competitive forces of the market should drive manufacturers to act as if they are utilizing behavioral findings to exploit consumer perceptions, regardless of manufacturers’ awareness of the processes. Thus, we argued that the relative indeterminacy of the behavioral research is irrelevant to products liability theory because manufacturers operating under the evolutionary influence of the market will untangle the various cognitive forces at play in the consumer’s mind even if behavioral researchers and legal scholars cannot.

[emphasis in original]

...

[1434] After a cleaner, more efficient alternative to cockroach spray sold well below expectations in rural areas of the Southern United States, researchers assigned to the problem asked a focus group of representative women to draw pictures of cockroaches and describe their feelings about them. To the researchers’ surprise, all the insects were drawn as males and the stories accompanying the drawings clearly revealed feelings about the men in the subject women’s lives. Researchers learned that for these women, “killing the roaches with a bug spray and watching them squirm and die allowed [them] to express their hostility toward men.

....

[1481] There is growing evidence that cigarette warnings may actually give the product an enhanced gloss in the eyes of young consumers. Several studies have demonstrated a forbidden fruit appeal from television parental advisory warnings for violent shows. Similar studies on the labeling effects of alcoholic versus nonalcoholic drinks also suggest
[1482]
that the warning itself may enhance the attractiveness of the product. Tobacco industry executives seem to have been well aware of that possibility. As early as 1973, Dr. Claude Teague of RJR noted that a new brand aimed at the young group “should not in any way be promoted as a ‘health’ brand” and perhaps should carry some implied risk. To the contrary, “the warning label on the package may be a plus.” Thus, just as tobacco manufacturers were able to devise seemingly safer cigarettes to appease risk-conscious adult smokers, they also seem able to take advantage of government-mandated product warnings as an appeal to children in their constant efforts to recruit new smokers.

[emailed to self, 16 March 2021]