Effects and value of verifiable information in a controversial market: Evidence from lab auctions of genetically modified food

Abstract

Food products containing genetically modified (GM) ingredients have entered the market over the past decade. The biotech industry and environmental groups have disseminated conflicting private information about GM foods. This paper develops a unique methodology for valuing independent third-party information in such a setting and applies this method to consumers' willingness to pay for food products that might be GM. Data are collected from real consumers in an auction market setting with randomized information and labeling treatments. The average value of third-party information per lab participant is small, but the public good value across U.S. consumers is shown to be quite large. (JEL C91, D12, D82) © 2007 Western Economic Association International.