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|Title: ||Corporate and Consumer Social Responsibilities: Label Regulations in the Lab|
|Authors: ||Etile, Fabrice|
|Authors (Email): ||Teyssier, Sabrina (Sabrina.Teyssier@ivry.inra.fr)|
|JEL Codes: ||C92|
|Issue Date: ||2011|
|Abstract: ||Although consumer attitudes toward corporate social responsibility are positive, socially
responsible (SR) products are far from gaining significant market shares. Information
asymmetries have been identified as one of the factor contributing to this attitude-behaviour
gap, because social responsibility is a credence attribute. Signalling may remedy this market
failure. We use an experimental posted offer market to investigate the impact of various
regulatory requirements for labels on sellers’ choice to supply SR products and to signal it,
and on buyers’ choice of ethical quality. Three treatments are tested: label certification by a
third-party, “cheap-talk signalling” with random monitoring and with or without reputations.
Individual social preferences are elicited prior to the game, and their distribution generates a
positive supply of and demand for social responsibility. When there is third-party certification
or cheap-talk signalling with random monitoring and reputations, a separating equilibrium
emerges, whereby labelled and non-labelled goods are exchanged at different prices.
However, efficiency gains are significant only for third-party certification. Cheap-talk
signalling with random monitoring but without reputations does not yield efficiency gains.
Moreover, it generates a “halo” effect, whereby buyers are misguided by sellers’ claims about
product quality. Finally, individual social preferences have a significant effect on players’
decisions. Only third-party certification can increase companies’ social responsibility and can
allow consumers to express their social preferences through consumption.|
|Institution/Association: ||European Association of Agricultural Economists>2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland|
|Total Pages: ||13|
|Collections:||2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland|
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