Unmasking Greenwashing in the Building Materials Industry Through an Evolutionary Game Approach via Prospect Theory

Abstract

Green building materials play a vital role in mitigating the significant carbon emissions produced by the construction industry. However, the widespread presence of greenwashing, where firms falsely portray their products or practices as environmentally friendly, presents a critical obstacle to the adoption of genuinely sustainable materials. The risk of collusion between building material enterprises and certification institutions further exacerbates this challenge by undermining trust in green certification processes. To investigate these issues, this study develops an evolutionary game model that captures the strategic interactions between building material enterprises and certification institutions. The model incorporates the behavioral assumptions of prospect theory, specifically bounded rationality, loss aversion, and diminishing sensitivity, to reflect the real-world decision-making behavior of the involved actors. The findings reveal three evolutionarily stable strategies (ESS) within the system. First, a higher initial willingness by both enterprises and certifiers to engage in ethical practices increases the likelihood of convergence to an optimal and stable outcome. Second, a greater degree of diminishing sensitivity in the value function promotes the adoption of authentic green behavior by enterprises. In contrast, a lower degree of diminishing sensitivity encourages certification institutions to refrain from collusion. Third, although the loss aversion coefficient does not directly affect strategy selection, higher levels of loss aversion lead to stronger preferences for green behavior among enterprises and noncollusive behavior among certifiers. This research makes a novel theoretical contribution by introducing prospect theory into the analysis of greenwashing behavior in the building materials sector. It also provides actionable insights for improving regulatory frameworks and certification standards to mitigate greenwashing and enhance institutional accountability.