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Noisy Information Signals and Endogenous Preferences for Labeled Attributes

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  • Liaukonyte, Jura
  • Streletskaya, Nadia
  • Kaiser, Harry

Abstract

Consumer preferences for labeled products are often assumed to be exogenous to the presence of labels. However, the label itself (and not the information on the label) can be interpreted as a noisy warning signal. We measure the impact of “Contains” labels and additional information about the labeled ingredients, treating preferences for labeled characteristics as endogenous. We find that for organic food shoppers, the “Contains” label absent additional information serves as a noisy warning signal leading them to overestimate the riskiness of consuming the product. Provision of additional information mitigates the large negative signaling effect of the label.

Suggested Citation

  • Liaukonyte, Jura & Streletskaya, Nadia & Kaiser, Harry, 2015. "Noisy Information Signals and Endogenous Preferences for Labeled Attributes," 2015 Conference, August 9-14, 2015, Milan, Italy 211823, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae15:211823
    DOI: 10.22004/ag.econ.211823
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    References listed on IDEAS

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    1. repec:spr:agfoec:v:7:y:2019:i:1:d:10.1186_s40100-019-0123-y is not listed on IDEAS
    2. Kofi Britwum & Amalia Yiannaka, 2019. "Labeling food safety attributes: to inform or not to inform?," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 7(1), pages 1-21, December.
    3. repec:bla:canjag:v:66:y:2018:i:1:p:87-102 is not listed on IDEAS
    4. Liu, Xiaoou & Lopez, Rigoberto & Zhu, Chen, 2015. "Can Voluntary Nutrition Labeling Lead to a Healthier Food Market?," 2016 Allied Social Sciences Association (ASSA) Annual Meeting, January 3-5, 2016, San Francisco, California 212818, Agricultural and Applied Economics Association.
    5. Murphy, David M. A., 2017. "Underground Knowledge: Soil Testing, Farmer Learning, and Input Demand in Kenya," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258372, Agricultural and Applied Economics Association.
    6. repec:oup:apecpp:v:39:y:2017:i:3:p:407-427. is not listed on IDEAS

    More about this item

    Keywords

    Agricultural and Food Policy; Labor and Human Capital;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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