Does prior knowledge of food fraud affect consumer behavior? Evidence from an incentivized economic experiment

Abstract

This study uses a laboratory experiment to examine whether prior knowledge of food fraud persistently affects consumer behavior. We invited regular consumers of olive oil to participate in an olive oil valuation experiment. We used a within-subject design to compare consumers’ willingness to pay (WTP) for Italian extra virgin olive oil (EVOO) before and after receiving information about labeling scandals in the Italian olive oil industry. After the first round of bidding, but before introducing information about labeling scandals or otherwise mentioning food fraud, we surveyed participants about whether they had heard of food fraud. Results indicate that prior knowledge of food fraud plays an important role in explaining consumers’ valuation behavior, both in the pre-information baseline bidding and in how they update their valuation in response to information about a food fraud scandal. Consumers who reported prior knowledge of food fraud partially accounted for the possibility of food fraud in their initial pre-information valuation, submitting significantly lower bids than participants who did not report prior knowledge. They also reacted less to olive oil fraud information than consumers who reported no prior knowledge of food fraud. Findings of this study highlight the potential long-term consequences of increasing consumer awareness of food fraud incidents on consumer WTP for products in industries that have experienced food fraud scandals.

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“…However, more and more evidence has surfaced, showing that individuals tend to overstate the amount they are willing to pay for a good in a hypothetical setting compared to situations when there is financial consequentiality (e.g., [1,2]). In response to increased skepticism regarding incentive compatibility in hypothetical settings, incentivized, non-hypothetical experimental auctions and choice experiments have become popular and are frequently used by empirical economists in their field and laboratory experiments (e.g., [3][4][5][6][7]). While non-hypothetical experiments certainly mitigate hypothetical bias, they often suffer from the limitation of relatively small sample sizes or specific groups (e.g., university students, convenience samples, etc.)…”

The Effect of Verbal and Iconic Messages in the Promotion of High-Quality Mountain Cheese: A Non-Hypothetical BDM Approach

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Attitudes towards Olive Oil Usage, Domestic Storage, and Knowledge of Quality: A Consumers’ Survey in Greece

“…In a recent Italian study [11], even though 73% of the participants stated that they knew the characteristics of EVOO, only just above 50% were able to correctly recognize those characteristics that distinguish this product. In general, previous surveys in Greece have described consumers' preferences, attitudes, and perceptions about olive oil characteristics [19]; consumers' perception regarding olive oil authenticity [20]; and the economic and socio-spatial attributes that affect consumers' choices on purchasing olive oil from the supermarket or from a friend/relative or consuming their own production [10]. Overall, many of the attributes that guide consumer preference and purchase are conveyed to the consumers through the label information and the certification logos [11].…”