Working Paper Number
WP #04029, November 2004
In most environments, information is critical to consumers’ decision making. Consumers have prior beliefs about quality and price of goods and services and obtain new information which is used to update these prior beliefs or to form posterior beliefs, i.e., Bayesian learning. New food products made from herbicide-tolerant and insect-resistant crops using bioengineering, have appeared in U.S. supermarkets starting in 1996. The objective of this paper is to examine in depth the role of consumer’s prior beliefs about genetic modification and of diverse, new information on their willingness to pay for foods that might be genetically modified. One hypothesis is that prior beliefs matter and, second, consumers give less weight to information from interested than disinterested par ties. We use a unique data set collected from a set of economics experiments to show that consumers who had informed prior beliefs behaved as if they placed more trust in the third-party information than in information from interested parties. Participants whose prior beliefs were uninformed revealed greater variation in their bidding behavior than informed participants.
Huffman, Wallace; Rousu, Matthew; Shogren, Jason F.; and Tegene, Abebayehu, "The Effects of Prior Beliefs and Learning on Consumers’ Acceptance of Genetically Modified Foods" (2004). Economics Working Papers (2002–2016). 243.