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Product Labels and Linear Thinking in a World with Asymmetric Information

Motivation

The demand for sustainable and socially responsible produced products increased in the last couple of years. To tag such products, and probably change consumers behavior in a certain way, very often food labels are used. The deliberate design of labels might steer consumption in a socially desired way - known as "nudging" in behavioral economics. However, the design of labels could also be used to brand and advertise products. The focus of the project is to investigate to what extend the design of labels changes the willingness to buy sustainably produced products or the willingness to pay higher prices for them.

Method

Together with the Nuremberg Institute of Technology, we investigate in an experimental conjoint study, how the design of the animal welfare label which is commonly used changes the demand for sustainably produced products. In its current version, the label implies a linear relation between its different levels with respect to animal husbandry or welfare.

The actual relation between the levels, however, is non-linear. This divergence of the real relationship and the linear interpretation of the displayed label levels might influence consumption behavior and, thus, demand for certain products. To analyze this effect, an online experiment has been conducted, experimentally varying the visualization of the label between two experimental groups to measure the influence of the visualization of the label on sustainable consumption.

Relevance

Since product labels aim on giving consumers orientation and help to make certain product qualities and attributes tangible, marketers need to understand how the design of a product label effects consumers’ perception of such labels and, thus, consumption behavior. In this project, we give first insights by showing that label design could lead to biased perception which leads to biased consumption with respect to preferences.

Contact

Dr. Vladimir Manewitsch Birgit Stoltenberg Dr. Matthias Unfried
vladimir.manewitsch@nim.org birgit.stoltenberg@nim.org matthias.unfried@nim.org

Partner

Prof. Dr. Florian Riedmüller, TH Nürnberg

Publications

Publication in preparation

In the press

Article in planung&analyse

Article in agrarheute