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Ethical Differentiation and Consumption in an Incentivized Market Experiment

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  • Marieta Valente

Abstract

In surveys consumers express preferences for ethical goods. Some authors claim, however, that survey responses do not translate into actual costly purchase behavior. To study if ethical consumption and differentiation occur in an incentive-compatible setting, this paper implements a design of an incentivized market experiment, which has been studied in the context of homogenous goods and both theoretically and experimentally engenders a dynamic of price decrease. This experiment establishes that ethical differentiation can be an effective strategy for sellers with ethically motivated buyers; and, although there is an ethical price premium, it accrues to the charity rather than to the seller. Copyright Springer Science+Business Media New York 2015

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  • Marieta Valente, 2015. "Ethical Differentiation and Consumption in an Incentivized Market Experiment," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(1), pages 51-69, August.
    • Handle: RePEc:kap:revind:v:47:y:2015:i:1:p:51-69
    DOI: 10.1007/s11151-015-9455-2
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    Cited by:

    1. Mario Biggeri & Domenico Colucci & Nicola Doni & Vincenzo Valori, 2021. "Good deeds, business, and social responsibility in a market experiment," Working Papers - Economics wp2021_14.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    2. Huber, Laura Rosendahl & Sloof, Randolph & Van Praag, Mirjam, 2017. "The effect of incentives on sustainable behavior: evidence from a field experiment," Labour Economics, Elsevier, vol. 45(C), pages 92-106.
    3. Felgendreher, Simon, 2018. "Do consumers choose to stay ignorant? The role of information in the purchase of ethically certified products," Working Papers in Economics 717, University of Gothenburg, Department of Economics.
    4. Mario Biggeri & Domenico Colucci & Nicola Doni & Vincenzo Valori, 2022. "Sustainable Entrepreneurship: Good Deeds, Business, Social and Environmental Responsibility in a Market Experiment," Sustainability, MDPI, vol. 14(6), pages 1-20, March.
    5. Joachim P. Hasebrook & Leonie Michalak & Anna Wessels & Sabine Koenig & Stefan Spierling & Stefan Kirmsse, 2022. "Green Behavior: Factors Influencing Behavioral Intention and Actual Environmental Behavior of Employees in the Financial Service Sector," Sustainability, MDPI, vol. 14(17), pages 1-35, August.
    6. Levens Michael, 2017. "The Influence of Organic Product Classification On Charitable Contributions Embedded in Retail Prices," Economics and Culture, Sciendo, vol. 14(1), pages 31-40, June.
    7. Maria Eduarda Fernandes & Marieta Valente, 2018. "When Is Green Too Rosy? Evidence from a Laboratory Market Experiment on Green Goods and Externalities," Games, MDPI, vol. 9(3), pages 1-18, September.
    8. Fernandes, Maria Eduarda & Valente, Marieta, 2021. "What you get is not what you paid for: New evidence from a lab experiment on negative externalities and information asymmetries," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 93(C).

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