Abstract:
This paper reports on an experiment that tests for the existence of peer
effects in consumers’ willingness to pay (WTP) for sustainable products. More
specifically, we investigate whether the premium for an eco-labeled laundry
detergent is sensitive to receiving information about the premium paid by other
members of one’s social group. The information manipulations in the experiment
test for two distinct types of social influence, i.e., conformist and payoff-biased
transmission. We find strong empirical evidence for a conformist transmission.
Participants informed about the positive premium paid by the majority of their peers
reported a higher premium than individuals not receiving any information. This
result shows that previous studies on the WTP for sustainable products, which
explain premiums by attitudinal measures and sociodemographic traits,
unwarrantedly provide an under-socialized account. The inclusion of social
influence variables significantly increases the explanatory power of the model.
