Clear and intuitive disclosures benefit consumers on online marketsplaces
A new EU Directive increases the transparency of online marketplaces by requiring the clear disclosure of a range of important consumer information. The clarity, and thus effectiveness, of online disclosures can vary significantly depending on the presentation of the information, as demonstrated by the study in this article concerning paid rankings.
Paid ranking involves providers paying extra in exchange for a higher position in search results on
online marketplaces. If consumers are unaware of payments affecting the search results, there is a risk that they may be misled. Transparency through mandated disclosure can limit this risk, but what does it take for consumers to notice and understand the disclosed information? This study finds that prominent, clear and intuitive disclosure nearly triples the share of consumers aware of paid search results, compared to a baseline disclosure.