Unravelling theory in choice analysis: do consumers fill in the blanks?

Abstract

Unravelling theory postulates that consumers assume products without quality information are of the lowest quality. In a discrete choice experiment (DCE) with 1987 respondents from the UK, we find evidence against this assumption. Affirmative disclosure, which indicates only quality above the lowest level, lowers marginal utilities compared to complete disclosure. The development in food choice DCE studies, from textual and complete towards visual and affirmative increases mean willingness to pay and error variance. This suggests that analysts should carefully consider how attributes are presented when designing DCEs to avoid biased welfare estimates, especially when aiming for accurate market predictions or policy advice.

Keywords

unravelling theory; unfolding theory; attribute representation; discrete choice analysis; choice experiment; information processing; welfare estimates

Published in

European Review of Agricultural Economics
2025
Publisher: OXFORD UNIV PRESS

SLU Authors

• Edenbrandt, Anna Kristina

  • Department of Economics, Swedish University of Agricultural Sciences
    

UKÄ Subject classification

Economics

Publication identifier

• DOI: https://doi.org/10.1093/erae/jbaf009

Permanent link to this page (URI)

https://res.slu.se/id/publ/141430