TY - JOUR
T1 - Not all about the money
T2 - Service quality information improves consumer decision-making
AU - Blijlevens, Janneke
AU - Chuah, Swee Hoon
AU - Neelim, Ananta
AU - Prasch, Johanna E.
AU - Skali, Ahmed
N1 - Publisher Copyright:
© 2024 The Author(s)
PY - 2024/12
Y1 - 2024/12
N2 - Information asymmetries are pervasive in many industries and can result in large losses in consumer welfare. Does providing product quality information result in improved consumer decision-making? We study this question in a market where quality is notoriously hard to determine ex ante: the residential energy market. Using a discrete choice experiment (N = 1,002), we document a substantial willingness-to-pay (37–45 % of the median bill) for four service quality attributes (transparency, agency, authenticity, and convenience). In an incentivized search task (N = 432), we show that how quality information is presented matters: consumers who view information in the form of ratings and stamps of approval are (i) 4 % more likely to opt in to the search task, and (ii) 20 % more likely to correctly identify given levels of quality, relative to consumers who are provided with bar graphs, pie charts, and text. Finally, using a decision experiment (N = 510) with real company names familiar to our participants, we find that the provision of quality information increases choices of the best-rated company more than 20-fold, relative to the control scenario where quality information is absent, in which consumers select companies predominantly on price and brand awareness. Our findings are applicable to other markets in which information asymmetries are present, where policymakers should consider interventions that promote transparency and quality information provision.
AB - Information asymmetries are pervasive in many industries and can result in large losses in consumer welfare. Does providing product quality information result in improved consumer decision-making? We study this question in a market where quality is notoriously hard to determine ex ante: the residential energy market. Using a discrete choice experiment (N = 1,002), we document a substantial willingness-to-pay (37–45 % of the median bill) for four service quality attributes (transparency, agency, authenticity, and convenience). In an incentivized search task (N = 432), we show that how quality information is presented matters: consumers who view information in the form of ratings and stamps of approval are (i) 4 % more likely to opt in to the search task, and (ii) 20 % more likely to correctly identify given levels of quality, relative to consumers who are provided with bar graphs, pie charts, and text. Finally, using a decision experiment (N = 510) with real company names familiar to our participants, we find that the provision of quality information increases choices of the best-rated company more than 20-fold, relative to the control scenario where quality information is absent, in which consumers select companies predominantly on price and brand awareness. Our findings are applicable to other markets in which information asymmetries are present, where policymakers should consider interventions that promote transparency and quality information provision.
KW - Decision-making
KW - Energy markets
KW - Informed decisions
KW - Presentation of information
KW - Service quality attributes
UR - http://www.scopus.com/inward/record.url?scp=85206850931&partnerID=8YFLogxK
U2 - 10.1016/j.jebo.2024.106769
DO - 10.1016/j.jebo.2024.106769
M3 - Article
AN - SCOPUS:85206850931
SN - 0167-2681
VL - 228
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
M1 - 106769
ER -