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Generic aversion and observational learning in the over-the-counter drug market

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  • Villas-Boas, Sofia B
  • Carrera, Mariana

Abstract

Through a labeling intervention at a national retailer, we test three hypotheses for consumer aversion to generic over the counter (OTC) drugs: lack of information on the comparability of generic and brand drugs, inattention to their price differences, and uncertainty about generic quality that can be reduced with information on peer purchase rates. With a difference-in-differences strategy, we find that posted information on the purchases of other customers increases generic purchase shares significantly, while the other treatments do not. Consumers without prior generic purchases appear particularly responsive to this information. These findings have policy implications for promoting evidence-based, cost-effective choices.

Suggested Citation

  • Villas-Boas, Sofia B & Carrera, Mariana, 2016. "Generic aversion and observational learning in the over-the-counter drug market," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0q03b5f2, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt0q03b5f2
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    Cited by:

    1. Hjalmarsson, Linn & Schmid, Christian P.R. & Schreiner, Nicolas, 2024. "A Prescription for Knowledge: Patient Information and Generic Substitution," Working papers 2024/05, Faculty of Business and Economics - University of Basel.
    2. Janssen, Aljoscha & Granlund, David, 2023. "The importance of the first generic substitution: Evidence from Sweden," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 1-25.
    3. Haruo Kakehi & Ryo Nakajima, 2024. "Role of Pharmacists in Generic Pharmaceutical Adoption," Keio-IES Discussion Paper Series 2024-015, Institute for Economics Studies, Keio University.
    4. Carly Trachtman & Molly Dop & Sofia Villas-Boas, 2019. "Understanding the Influence of Brand Information in Online Purchase Decisions for Health Products," Springer Proceedings in Business and Economics, in: Francisco J. Martínez-López & Juan Carlos Gázquez-Abad & Anne Roggeveen (ed.), Advances in National Brand and Private Label Marketing, pages 197-204, Springer.

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    More about this item

    Keywords

    Social and Behavioral Sciences;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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