Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Gothenburg, Department of Economics

No 717: Do consumers choose to stay ignorant? The role of information in the purchase of ethically certified products

Simon Felgendreher ()
Additional contact information
Simon Felgendreher: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O. Box 640, SE 40530 GÖTEBORG, Sweden

Abstract: The paper analyzes how consumers access information about ethical certificates and how access to this information influences consumers’ purchasing decisions. Using an experimental market game and letting consumers choose between a certified and an uncertified product, this study finds that consumers do not ignore information about the effectiveness of ethical certificates in a systematic manner. Also, as long as the access to information is costless, varying the way it is provided to consumers does not influence the purchasing decision between a certified and an uncertified product. However, consumers are extremely price sensitive: once a small cost for information is introduced, most consumers are not willing to access it, and the share of consumers buying the certified product decreases significantly.

Keywords: information; strategic ignorance; experiment; market; ethical consumption; Fair Trade; Fairtrade; ethical labels

JEL-codes: C91; D12; D64; D89

34 pages, January 2018

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