Research finds companies may be embracing misleading information rather than correcting it

Guo says the group wanted to test whether a counter-message could change minds and the resulting purchases, or whether the psychological theory of confirmation bias—in which people refuse any piece of information that is different from their prior beliefs—would be too difficult to overcome.

“We start with a short corrective message embedded in a social media post and measure whether it would work,” Guo said. “If confirmation bias persists, we shouldn’t expect any correcting message to work.”

The researchers conducted two waves of online experiments with more than 20,000 participants from varied backgrounds.

In the first wave, the scholars first exposed half of the participants to an ad containing misleading information about an ingredient and the other half to an unrelated control ad that did not contain misleading information. Subsequently, each participant was randomly shown either a fun fact about the product category (control), or debunking messages from federal regulators, media, or competitor firms. In the second wave, the scholars expanded the study sample further to allow for detailed assessment of participants’ beliefs and baseline knowledge about the three ingredients before assigning them into any set of ads and debunking messages.

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Guo says findings showed:

1.  misleading information makes an impact and distorts customers’ purchasing choices, except when people have prior misinformed beliefs, in which case those beliefs are confirmed
2.  debunking is effective in changing customers’ beliefs, especially for those participants who had distorted beliefs before the experiment

“That's when the corrective information offers the highest informational value,” Guo said.

Lack of Incentive to Correct Inaccurate Information

Armed with proof that debunking could be effective, the research turned to understanding business incentives to correct misleading information.

The researchers simulated the market for a product, shared by different competitors. They imagined a new firm entering the market and offering an ingredient-free product after the ingredient had been subjected to safety claims that weren’t science-based. The group’s quantitative simulation was based on the shifts in consumers’ willingness to purchase the product, as observed in the previous experiments.

The simulation showed that rather than correcting a misleading claim made by a new firm entering the market and stay “clean,” it is more profitable for an existing firm to offer a product without the ingredient in question.

“In unregulated markets, companies have incentives to conform to misinformation rather than combat it,” Guo said. “Debunking messaging works to change consumers’ minds, but it’s simply too costly to be the only company telling the truth when many others are preying on misinformed people by confirming their misbeliefs.”

The researchers found that coordination in debunking efforts by companies is key to success but hard to achieve.

"Such dilemmas appear in other contexts as well, with firms debating whether to embrace sustainability goals, corporate social responsibility, or to limit greenhouse gas emissions,” Guo said. “When these goals align with existing consumer beliefs and preferences, these pledges might be easy to adopt, but when they require coordinated efforts by all firms, regulator intervention might be needed.”  

The Role of Product Regulators in Debunking Inaccuracies  

Guo says because of business incentives to work around mistruths, rather than correcting them, the market is unable to regulate itself.

Instead, she believes agencies who regulate product claims—like the Federal Trade Commission and the Food and Drug Administration—are best positioned to help correct misleading information. In fact, the researchers tested the impact of corrective campaigns by product-claim regulators and found messages from those agencies were the most effective in changing beliefs, over information provided by companies or the media.

Guo says this provides an opportunity for online platforms that design recommendation algorithms and personalized content to work more closely with product regulators.

“They're pretty good at controlling people's attention and know their beliefs and preferences so well,” Guo said. “They can provide unique value to the collective effort to mitigate the impact of misleading information.”