Under-contribution to generic advertising due to self-interested inequity aversion

Jura Liaukonyte, Timothy J. Richards, Harry Kaiser and Bradley J. Rickard

European Review of Agricultural Economics, 2015, vol. 42, issue 3, 473-497

Abstract: We modify the behavioural postulate of self-centred inequity aversion to explain producers' reluctance to fund generic fruit and vegetable advertising as a result of experiencing negative utility when others benefit more from a public good than themselves, but positive utility when they earn more than others. We find that higher variability in returns decreases the probability of a favourable vote. Conversely, if information about payoffs is incomplete, if subjects are allowed to experience a trial run of a generic advertising programme, if returns are equal across producers, or if there is government support for the programme, the likelihood of approval rises.

Date: 2015
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European Review of Agricultural Economics is currently edited by Timothy Richards, Salvatore Di Falco, Céline Nauges and Vincenzina Caputo

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