The Effects of Personalized Advertisements on Consumer Decision-Making Behavior

Abstract

Advertisers have increasingly turned to personalized advertisements to increase profitability in recent years. While lay belief and industry practices suggest that these targeting strategies are effective and elicit positive consumer responses, little empirical evidence supports this. In this project, we find that counterintuitively, consumers tend to experience less enjoyment and have lower purchase intentions. These effects are driven by the fact that consumers both tend to trust personalized ads less and experience more epistemic fragmentation (when online targeting isolates users, increasing their vulnerability). Our findings contribute to consumer behavioral research in the technological sphere.