empirical evidence concerning the rules for misleading representation using an experimental approach based on real (sometimes deceptive) advertising. We use the data from a recent Competition Policy Research Center’s (CPRC) research paper (Ogawa et al., 2008). In turn, this employs an internet survey of consumers responding to newspaper advertisements attached to the JFTC’s press release on its warnings about three mobile phone companies on 12 December 2006.

The research draws on an experimental data set with three unique features. First, the experiment focuses on any consumer misunderstanding arising from company misrepresentation. In at least some countries, there are many cases of misleading representation, and much advertising/marketing effort goes into data gathering and the analysis of how companies sell their goods. However, few studies are concerned with how consumers misunderstand or are misled by company misrepresentation. $ ^{7} $ From this point of view, the data underlie a unique experiment. Second, the experiment shows the actual situation where a company struggles to create demand through advertising. It is difficult to construct these real economic and social conditions in a laboratory experiment. However, this experiment draws on consumer recognition of actual advertising. Therefore, it meets the reality check of an experimental framework. Finally, this experiment includes a comparatively large number of test subjects. In general, while it is difficult to gather people in a laboratory setting, it is also not easy to control the data-gathering process in questionnaire surveys. The sample includes about 1000 subjects that reflect the demographic distribution of the population. From a statistical viewpoint, this is a good sample for examining actual situations in the real world.

The note is structured as follows. Section 2 briefly describes the related literature. Section 3 presents the experimental framework, and Section 4 provides the results. Section 5 discusses the implications of our findings. Section 6 concludes.

### 2. Related literature

Nelson (1970, 1974) undertook seminal work on the economics of advertising. Nelson (1970) introduces a useful distinction between “search” and “experience” goods: consumers can assess the former prior to purchase, whereas they can assess the latter only after purchase and use. Nelson (1974) argues that false claims about search goods will not induce purchases as they can be checked prior to purchase. As claims may damage a seller’s reputation, only valid claims are rational for search goods. However, there is an incentive to use deceptive advertising for experience goods to induce trial purchases. $ ^{8} $

Peltzman (1981), the first paper to focuses on FTC advertising regulation, concludes that the “toothless tiger” image of FTC advertising regulation is wrong. It then explains that visible and sometimes very substantial effects of regulation arise in the product, advertising and (especially) capital markets using data analysis. This analysis is quite useful as an initial exercise for FTC advertising regulation. Sauer and Leffler (1990) deal with the effects of the FTC’s Advertising Substantiation Program for more truthful advertising developed in the early 1970s. They analyze changes in advertising intensity, media choice, media wealth, and the progress of new entrants coupled with changes in