This paper reports the results of an experiment in which subjects had to buy real products in 5 different budget/price situations. Subjects were randomly drawn from the population of a medium-sized French city, and some of their socio-economic characteristics were recorded. We check the consistency of product choices with the Generalized Axiom of Revealed Preferences (GARP), and find that 29% of the subjects are GARP-inconsistent. This inconsistency rate is slightly lower than the ones found in comparable studies. A possible explanation for our lower rate of GARP violations might be that the subjects in our study were confronted with less budget/price situations. In looking for determinants of the GARP violations, we find that gender, the size of the household, the degree of switching between different products, and the times spent on performing experimental tasks have significant impacts on the probability of GARP-inconsistency.

We experimentally study competitive markets with socially responsible production. Our main focus is on the producers’ decision whether or not to reveal the degree of social responsibility of their product. Compared to two benchmark cases where either full transparency is enforced or no disclosure is possible, we show that voluntary and costless disclosure comes close to the full transparency benchmark. However, when the informational content of disclosure is imperfect, social responsibility in the market is significantly lower than under full transparency. Our results highlight an important role for transparent and standardized information about social externalities.

This paper considers the external validity of the growing corpus of literature that reports the use of laboratory auctions to reveal consumers’ willingness to pay for consumer goods, when the concerned goods are sold in retail stores through posted price procedures. The quality of the parallel between the field and the lab crucially depends on whether being informed of the actual field price influences a consumer's willingness to pay for a good or not. We show that the elasticity of the WTP revision according to the field price estimation error is significant, positive, and can be roughly approximate to one quarter of the error. We then discuss the normative implications of these results for future experiments aimed at eliciting private valuations through auctions.

We study how consumer preferences affect the transmission of microeconomic price shocks to consumer price index (CPI) inflation. These preferences give rise to complementarities and substitutions between goods, generating demand-driven cross-price dependencies that either amplify or mitigate the impact of price shocks. Our results demonstrate that while both effects are present, positive spillovers due to complementarities dominate. The magnitude of these cross-price effects is significant, demonstrating their importance in shaping CPI inflation dynamics. Most importantly, demand-driven price linkages decisively shape the impact of producer prices on CPI inflation. These findings underscore the need to take into account demand-driven price dependencies when assessing the impact of price shocks on CPI inflation, rather than relying solely on supply-related ones.

We present an hierarchical Bayes approach to modeling parameter heterogeneity in generalized linear models. The model assumes that there are relevant subpopulations and that within each subpopulation the individual-level regression coefficients have a multivariate normal distribution. However, class membership is not known a priori, so the heterogeneity in the regression coefficients becomes a finite mixture of normal distributions. This approach combines the flexibility of semiparametric, latent class models that assume common parameters for each sub-population and the parsimony of random effects models that assume normal distributions for the regression parameters. The number of subpopulations is selected to maximize the posterior probability of the model being true. Simulations are presented which document the performance of the methodology for synthetic data with known heterogeneity and number of sub-populations. An application is presented concerning preferences for various aspects of personal computers.

Understanding consumer choices and their drivers of willingness to pay (WTP) for a bottle of wine has been a research challenge in wine economics, particularly in niche markets such as sparkling wine. This study investigates the determinants of WTP for sparkling wine based on data from Portuguese consumers. The results provided by two alternative methodologies are compared: a traditional econometric model, based on the estimation of an ordered probit model; and a modelling approach based on data-driven and using machine learning algorithms. Both approaches present similar results, highlighting the relevance of some determinants including income, Champagne brand, not being a protected designation of origin and being a red wine consumer as main predictors of WTP for sparkling wine in Portugal.

The UK government launched a two-component sugar-reduction programme in 2016, one component is the taxation of sugar-sweetened beverages, the Soft Drinks Industry Levy, and the second is a voluntary sugar reduction programme for products contributing most to children’s sugar intakes. These policies provided incentives both for industry to change the products they sell and for people to change their food and beverage choices through a ‘signalling’ effect that has raised awareness of excess sugar intakes in the population. In this study, we aimed to identify the relative contributions of the supply- and demand-side drivers of changes in the sugar density of food and beverages purchased in Great Britain. While we found that both supply- and demand-side drivers contributed to decreasing the sugar density of beverage purchases (reformulation led to a 19 % reduction, product renewal 14 %, and consumer switching between products 8 %), for food products it was mostly supply-side drivers (reformulation and product renewal). Reformulation contributed consistently to a decrease in the sugar density of purchases across households, whereas changes in consumer choices were generally in the opposite direction, offsetting benefits of reformulation. We studied the social gradient of sugar density reduction for breakfast cereals, achieved mostly by reformulation, and found increased reductions in sugar purchased by households of lower socio-economic status. Conversely, there was no social gradient for soft drinks. We conclude that taxes and reformulation incentives are complementary and combining them in a programme to improve the nutritional quality of foods increases the probability of improvements in diet quality.

This paper investigates the market position of hard cider within the broader alcoholic beverage market. The first experiment identifies two distinct consumer segments—around 40% prioritize flavor attributes, while 53% prefer production information. The second experiment utilizes a basket- and expenditure-based choice experiment and a multiple discrete choice extreme value model to assess hard cider's standing among commonly consumed alcoholic beverages. Results reveal that hard cider is perceived as a complement to red and white wine but is independent from beer. The study suggests marketing hard cider in conjunction with white wine to capitalize on observed complementarity. Emphasizing the importance of addressing both consumer segments—those valuing flavor notes and those prioritizing production information—the research offers valuable insights for optimizing hard cider market strategies.

During the First World War, the term “essential business” was used initially in military procurement, and then in disease control when pandemic influenza struck. Essential businesses were exempt from restrictions imposed in the interest of national defense or public health, so debates about essential business concerned the necessity of various goods and services to the consumer. Ultimately, the concept of essential business depended on a shared understanding of the American consumer’s rights and duties as a citizen. On the one hand, consumers furthered the state’s interests by complying with, interpreting, implementing, and enforcing public-health restrictions. On the other, what contemporaries called “the American standard of living” entitled citizens to maintain relatively large expenditures. This relationship between citizenship and consumption explains the economy’s surprising stability in 1918. The flu did not cause a depression because social norms authorized most consumer expenditures as legitimate and appropriate, even during the wartime epidemic. “Essential” work is theorized using the Marxist concept of socially necessary labor, which relates productivity and purchasing power to norms of consumption.

Compared to other policy instruments that aim to change consumer behavior, information provision is perhaps the least controversial. An important question is how information in the form of carbon labels can contribute to direct food consumption toward reduced climate impact. From a policy guidance perspective, there is a need to identify how the labeling strategy affects consumers’ ability to identify lower emitting food products and the behavioral change due to carbon information. Key aspects of a carbon label are discussed, as well as the implications of different labeling schemes. Drawing on economic and behavioral theories, we propose that, to assist consumers in identifying changes in consumption that contribute to significant reductions in their climate impact, a carbon label must enable comparisons between product groups and not only within narrowly defined product groups. This suggests mandatory labeling, since producers of high-emission products are less likely to display such labels. However, it is important to consider both costs and benefits of labeling schemes and to consider complementing labeling with other policy instruments.

The article shows that when people consider differentiated goods or services that differ in price and quality, they exhibit a decision-making bias of “relative thinking”: relative price differences affect them even when economic theory suggests that only absolute price differences matter. This result is obtained in four different consumption categories. Sometimes subjects are affected only by relative price differences (“full relative thinking”) and sometimes also by absolute price differences (“partial relative thinking”). This behavior has implications for various disciplines, and it is particularly relevant in models dealing with horizontal or vertical differentiation, optimal pricing, competitive strategy, or advertising.

Consumers often face prices that are the sum of two components, for example, an online purchase that includes a stated price and shipping costs. In such cases consumer behavior may be influenced by framing, i.e., how the components are bifurcated. Previous studies have demonstrated the effects of framing and anchoring in auctions. This study examines bidding patterns in a series of first-price sealed-bid experimental money auctions (where the commodity being auctioned is money itself). We hypothesize that bidders’ behavior is affected by the framing of the potential monetary payoff into “monetary prize” and “winner’s bonus” components. We find strong evidence of an anchoring effect that influences the strategic behavior of bidders.

The unit in which numerical information is presented can have a strong influence on how decision makers evaluate and choose between available choice options. The present work examines the influence of frequently used default units on judgments and decisions of energy efficiency. Across three experiments (Ntotal = 497), our results provide evidence that value sensitivity increases by about 25% in joint evaluation mode when a product attribute is presented in the default unit versus a non-default unit. As a result, presenting an attribute in the default unit led to more favorable evaluations of superior products and less favorable evaluations of inferior products. This result was robust to changes in the numerical magnitude of the non-default unit. Moreover, when joint evaluation was performed across different units, products described using the default unit were evaluated more favorably than products described using a non-default unit. More favorable evaluations based on the default unit translated into a higher willingness to pay for efficiency advantages. We discuss the theoretical and practical implications of default units to guide informed consumer judgments and effective energy efficiency labeling.

In January 2020, the United States implemented a federal bioengineered labeling standard for food products that contain genetically modified material set to go into effect in January 2022. This bioengineered label indicates which products contain detectable levels of genetic material that have been modified through lab techniques that cannot be achieved in nature. An already existing alternative to the bioengineered label is the Non-GMO Project verified label which has been on the market since 2007, and indicates products free of genetically modified material through lab techniques. As consumers are now confronted with multiple labels pertaining to information related to genetic engineering, it is important to understand how people interpret these labels as it can lead to a greater understanding of how they inform consumer choice. We conducted a survey with 153 biology and environmental studies undergraduate students at Binghamton University in Binghamton, New York, asking questions about participants' views on genetically modified organisms (GMOs) and related terminology, corresponding food labels and how these labels influence their purchasing decisions. Results demonstrated a lack of awareness of the bioengineered label compared to the Non-GMO Project verified label. Additionally, individuals associated ‘bioengineered’ and ‘genetically modified’ with differing themes, where ‘bioengineered’ was more often associated with a scientific theme and ‘genetically modified’ was more often associated with an agricultural theme. There was also a discrepancy in how individuals said these labels influenced their purchases vs how the labels actually influenced purchasing decisions when participating in choice experiments. While the majority of participants reported that neither the Non-GMO Project verified label nor the bioengineered label influenced their purchasing decisions, in choice experiments, the majority of respondents chose products with the Non-GMO Project verified label. This study can give insight into overall perceptions of different terminologies associated with genetic engineering, in addition to how these labels are interpreted by consumers, and how they could affect purchasing decisions with the implementation of the new bioengineered label.

Question effects are important when designing and interpreting surveys. Question responses are influenced by preceding questions through ordering effects. Identity Theory is employed to explain why some ordering effects exist. A conceptual model predicts respondents will display identity inertia, where the identity cued in one question will be expressed in subsequent questions regardless of whether those questions cue that identity. Lower amounts of identity inertia are found compared to habitual inertia, where respondents tend to give similar answers to previous questions. The magnitude of both inertias is small, suggesting they are only minor obstacles to survey design.