The purpose of this paper is to test some of the hypotheses and assumptions of the Groucho-paper to shed some light on what consumers really think and if labels increase the perceived quality of a product and, thus, increase the willingness to pay of consumers.
This effect plays a major role for credence good, i.e. those goods where the consumer has to believe they are of a certain quality.
Whenever you open a newspaper there might be an article about global warming, about critically endangered animal species, or air pollution and the health consequences. Those articles should be like a wake-up call to finally change peoples’ behaviour and save the environment, and lastly ourselves. Then you go to the supermarket and you see normal products and some products claiming to be “green”, “eco-friendly”, “fair” or “produced responsible” others with labels on it to prove it. What those labels really prove is often not clear to the consumers. This is when we speak about label credence goods.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Theoretical background
- The experiment
- Part 1
- Part 2
- Part 3
- The socio-demographic questionnaire.
- Data/results
- Conclusion/ Further research
- Sources/ Literature
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This research aims to investigate the influence of environmental labels on consumer perceptions and purchase decisions, specifically exploring the "Groucho Effect" of uncertain standards. The study examines whether labels increase perceived product quality and willingness to pay, particularly in situations where consumers have limited information about label standards.
- Consumer beliefs about label standards and product quality
- The impact of uncertain label standards on consumer behavior
- The "Groucho Effect" and its implications for labelling strategies
- The role of information asymmetry in consumer decision-making
- The effectiveness of environmental labels in promoting sustainable consumption
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This chapter introduces the research topic by highlighting the relevance of environmental labels and the growing concern about consumer confusion regarding their credibility. It outlines the theoretical framework based on the "Groucho Effect" proposed by Harbaugh et al. (2011) and outlines the objectives and hypotheses of the study.
- Theoretical background: This chapter delves into the theoretical underpinnings of the research, outlining the key concepts of information asymmetry and consumer beliefs regarding label standards. It explains the four different combinations of product quality and label standard, emphasizing how uncertainty about the applied standard can influence consumer perceptions and potentially undermine the effectiveness of labels.
- The experiment: This chapter describes the experimental design and methodology used in the study. It outlines the three parts of the experiment: (1) evaluation of environmental quality, (2) estimation of label standards, and (3) willingness to pay for labeled products. It also provides details about the participant pool, the experimental setting, and the time frame for the study.
- Part 1: This chapter presents the first part of the experiment, which focuses on testing consumer perceptions of environmental quality in relation to labeled and unlabeled products. It describes the different treatments used and the specific tasks assigned to participants, including the use of real and fake labels.
- Part 2: This chapter details the second part of the experiment, which investigates consumer beliefs about the applied standards of environmental labels. It outlines the different categories of environmental friendliness assessed and the methodology used to gather participant responses. It also discusses the inclusion of "not included in standard" option to address specific label limitations.
- Part 3: This chapter presents the third part of the experiment, designed to explore the two equilibria proposed by Harbaugh et al. (2011), namely the labelling equilibrium and the non-labelling equilibrium. It explains the methodology used to assess consumer willingness to pay for labeled products and their preference for labeled versus unlabeled versions of the same product. It also discusses the option provided to participants to claim information about the labels, demonstrating their interest in seeking further knowledge.
Schlüsselwörter (Keywords)
The study focuses on the following key concepts: environmental labels, consumer beliefs, information asymmetry, label credibility, Groucho Effect, willingness to pay, sustainable consumption, product quality, and experimental methodology. These keywords encapsulate the main themes and research interests of the study, aiming to contribute to a deeper understanding of consumer responses to environmental labels and the role of information in influencing their decisions.
- Quote paper
- Elvira Tafarrohi (Author), 2018, The Groucho-Effect. Are consumers really confused or do they just not care enough?, Munich, GRIN Verlag, https://www.grin.com/document/430943