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Consumer Perceptions of Commodity Characteristics: Implications for Choice and Well‐being
Author(s) -
Currie Martin,
Steedman Ian
Publication year - 2000
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/1467-9957.00216
Subject(s) - commodity , economics , welfare , consumer welfare , contrast (vision) , perception , microeconomics , consumer choice , consumer behaviour , public economics , positive economics , marketing , psychology , business , artificial intelligence , neuroscience , computer science , market economy
Consumers base market choices on beliefs about the properties of commodities. Invoking Lancaster’s characteristics approach, we explore the implications for consumer well‐being of such beliefs being incorrect. Following an examination of the welfare cost of inaccurate beliefs, we address the question: do more accurate beliefs necessarily result in greater well‐being? The impacts of changes in prices and income on well‐being are then explored and some implications are drawn for the use of compensating variation. Finally, we contrast alternative perspectives on what constitutes the appropriate measurement of welfare where consumers’ beliefs about what they are actually consuming are mistaken.