nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2005‒12‒20
one paper chosen by
Karl Petrick
Leeds Metropolitan University

  1. Persuasion in Finance By Sendhil Mullainathan; Andrei Shleifer

  1. By: Sendhil Mullainathan; Andrei Shleifer
    Abstract: Persuasion is a fundamental part of social activity, yet it is rarely studied by economists. We compare the traditional economic model, in which persuasion is communication of objectively valuable information, with a behavioral model, in which persuasion is an effort to fit the message into the audience's already held beliefs. We present a simple formalization of the behavioral model, and compare the two models using data on financial advertising in Money and Business Week magazines over the course of the internet bubble. The evidence on the content of the persuasive messages is broadly consistent with the behavioral model of persuasion.
    JEL: G11 G14 M3
    Date: 2005–12

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