Can an iPhone app keep businesses honest? Apparently so when it comes to the accuracy of self reported information about skiing conditions. That is the finding from a new paper by Jonathan Zinman and Eric Zitzewitz. Here is the abstract:
Casual empiricism suggests that deceptive advertising about product quality is prevalent, and several classes of theories explore its causes and consequences. We provide some unusually sharp empirical evidence on the extent, mechanics, and dynamics of deceptive advertising. Ski resorts self-report substantially more natural snowfall on weekends. Resorts that plausibly reap greater benefits from exaggerating do it more. Data on website visits suggests that consumers are appropriately skeptical of weekend reports. We find little evidence that competition restrains or encourages exaggeration. Near the end of our sample period, a new iPhone application feature makes it easier for skiers share information on ski conditions in real time. Exaggeration falls sharply, especially at resorts with better iPhone reception.
I should also add that Jonathan Zinman perfectly optimised his co-author to get first name in the economics ‘alphabetical order’ convention here.
If you want the app to contribute to the honesty pool yourselves, it is here.