Social and self-Image concerns in fair-trade consumption: Evidence from experimental auctions for chocolate

Can social interactions be used to favor the consumption of fair-trade products? Social interactions can alter purchase behaviors by triggering either self-image concerns (when one observes others' decisions without being observed) or social-image concerns (when everybody observes everyone). A laboratory experiment is designed to identify separately the role of these motivators, using real auctions for a standard and a fair-trade chocolate, and controlling carefully for taste and package differences. The willingness-to-pay (WTP) for the chocolates and the premium that the subjects grant to the fair-trade variety are analyzed. The results reveal that both social and self-image matter: the subjects give a higher premium to the fairtrade chocolate when their decisions are made public; the premium is adjusted according to the information that is received about the premium granted by other subjects, even when decisions remain private. However, the higher premium in public auctions is obtained through a decrease in the WTP for the standard chocolate, rather than an increase in the WTP for the fair-trade chocolate. In addition, the subjects are much more sensitive to information about others' choices that relax the moral or social norm constraining their own choices. We thus conclude that social interactions cannot be used to nudge consumers into fair-trade consumption, at least for ordinary products such as chocolate.