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Products with a superior environmental performance, such as a high level of energy efficiency, are typically subject to information asymmetries. Therefore these product attributes are often undervalued in purchase decisions. Signaling, e.g. energy labeling, can overcome these asymmetries, with positive implications for effective consumer decisions, competitive advantage for suppliers of energy-efficient goods, and for societal goals such as mitigating climate change. However, there is a scarcity of research investigating how energy labels actually influence consumer choice. The recent revision of the European Union energy label provided a unique opportunity to investigate the effectiveness of energy labeling in a quasi field-experimental setting. We show that the proposed extension of the seven-point A-G rating scale by adding new classes A+, A++, etc. will result in a lower perceived importance of energy efficiency in consumer decision-making. Based on a stated preference survey investigating 2244 choices by German consumers, we conclude that the revision actually undermines the label's ability to overcome information asymmetries, hence potentially contributing to market failure.
Based on an adaptive choice-based conjoint analysis, the aim of this paper is to ascertain the extent to which various characteristics of a condominium unit, and in particular the Building and Construction Authority (BCA) Green Mark Scheme, influence prospective real estate investors' preferences for condominium units in Singapore. Through the analysis, this study determines that premium buyers would be willing to pay for property certified by the Green Mark Scheme. The results suggest that the price premium buyers would be willing to pay for green certification varies within the different levels of the Green Mark Scheme, ranging from 3.78 per cent for the Certified award to 7.98 per cent for the Platinum award. The results thus suggest a strong business case for developers of green buildings.
Consumers frequently act contrary to rational economic theory by overvaluing an initially higher purchase price while heavily discounting future energy operating costs. One opportunity to help limit the scale of over-discounting is to fully disclose the energy consumption of a product, e.g., by means of an energy label. However, not only the availability of information, but also the way in which specific information about the energy consumption is framed, is likely to affect how individuals discount future operating costs. A cost accuracy estimation experiment reveals that disclosing annual energy operating costs for the product category of televisions might risk assisting consumers in realising that the possible energy operating cost savings fall below initial estimates. A subsequent choicebased conjoint experiment shows that disclosing annual energy operating costs thus affects consumers by causing them to discount future energy operating costs of a television more heavily than when the information is disclosed in the form of "watts." Owing to the power of the reversed "pennies-a-day" effect, disclosing lifetime energy operating cost information, however, proves to be most effective in guiding consumers towards more energy-efficient shopping behaviour. Implications for consumer policy and suggestions for future research are discussed.Keywords Energy operating cost disclosure . Energy labels . Discount rate . Energy efficiency gap . Choice-based conjoint analysis Residential appliances and electronic equipment are responsible for approximately 30% of the total consumption of electricity in countries belonging to the Organisation of Economic Co-operation and Development, and the demand for electricity to power those appliances is expected to grow significantly within the next few years (Bertoldi and Atanasiu 2009;Crosbie 2008;EEA 2010;IEA 2009). At the same time, there is great potential for significant energy savings in the residential sector by simply switching to the most efficient J Consum Policy (2012) 35:43-64
Over the last decade, the use of rating scales has grown in popularity in various fields, including customer online reviews and energy labels. Rating scales convey important information on attributes of products or services that consumers evaluate in their purchase decisions. By applying multidimensional scaling, this paper reveals that the meaning of the levels of a rating scale can be altered by manipulating the labeling of the rating scale levels. The study reveals that consumers perceive product attributes as being more similar if the labels share similar or identical linguistic or visual characteristics. In addition, two choice-based conjoint studies examine whether the way consumers make their choices among products can be influenced by changing the labeling of rating scale levels. The results show that a manipulation of the meaning of rating scale levels diminishes both the importance of the rating scale information and consumers' willingness to pay a premium for a rating upgrade.
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