Does prior knowledge of food fraud affect consumer behavior? Evidence from an incentivized economic experiment

RESEARCH ARTICLE

Does prior knowledge of food fraud affect

consumer behavior? Evidence from an

incentivized economic experiment

Syed Imran Ali Meerza

*, Christopher R. Gustafson

1 Department of Agriculture, Arkansas Tech University, Russellville, Arkansas, United States of America,

2 Department of Agricultural Economics, University of Nebraska-Lincoln, Lincoln, Nebraska, United States of

America

* [email protected]

Abstract

This study uses a laboratory experiment to examine whether prior knowledge of food fraud

persistently affects consumer behavior. We invited regular consumers of olive oil to partici-

pate in an olive oil valuation experiment. We used a within-subject design to compare con-

sumers’ willingness to pay (WTP) for Italian extra virgin olive oil (EVOO) before and after

receiving information about labeling scandals in the Italian olive oil industry. After the first

round of bidding, but before introducing information about labeling scandals or otherwise

mentioning food fraud, we surveyed participants about whether they had heard of food

fraud. Results indicate that prior knowledge of food fraud plays an important role in explain-

ing consumers’ valuation behavior, both in the pre-information baseline bidding and in how

they update their valuation in response to information about a food fraud scandal. Consum-

ers who reported prior knowledge of food fraud partially accounted for the possibility of food

fraud in their initial pre-information valuation, submitting significantly lower bids than partici-

pants who did not report prior knowledge. They also reacted less to olive oil fraud informa-

tion than consumers who reported no prior knowledge of food fraud. Findings of this study

highlight the potential long-term consequences of increasing consumer awareness of food

fraud incidents on consumer WTP for products in industries that have experienced food

fraud scandals.

Introduction

In recent years, food fraud scandals have gained widespread attention. Some, such as the adul-

teration of Chinese milk with melamine, have had serious health consequences. The adultera-

tion of milk with melamine led to the deaths of at least six infants and the hospitalization of

over 50,000 [1]. Others, including the discovery of horsemeat in many European meat prod-

ucts, and the mislabeling of Italian olive oils, result in consumers receiving an inferior product

than what they paid for. These scandals highlight the vulnerability of the food system to inten-

tional adulteration or misrepresentation of products based on economic motives [2] [3] [4].

PLOS ONE | https://doi.org/10.1371/journal.pone.0225113 December 3, 2019 1 / 14

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OPEN ACCESS

Citation: Meerza SIA, Gustafson CR (2019) Does

prior knowledge of food fraud affect consumer

behavior? Evidence from an incentivized economic

experiment. PLoS ONE 14(12): e0225113. https://

doi.org/10.1371/journal.pone.0225113

Editor: Alberto Antonioni, Carlos III University of

Madrid, SPAIN

Received: August 18, 2019

Accepted: October 28, 2019

Published: December 3, 2019

Peer Review History: PLOS recognizes the

benefits of transparency in the peer review

process; therefore, we enable the publication of

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editorial history of this article is available here:

https://doi.org/10.1371/journal.pone.0225113

open access article distributed under the terms of

the Creative Commons Attribution License, which

permits unrestricted use, distribution, and

reproduction in any medium, provided the original

author and source are credited.

Data Availability Statement: All relevant data are

in the manuscript and its Supporting Information

file.

Funding: Financial support for the research came

from Dr. Gustafson’s Start-Up Research Fund,

The economic costs of a food fraud scandal can range from lost sales and bankruptcies to

adverse health consequences. For example, the total cost of the 2008 melamine milk scandal

was estimated to be 10 billion dollars, which included the costs associated with product recalls

and withdrawals, incident investigation, lost sales, decreases in shareholder value, and adverse

health consequences [1].

One of the principal concerns about food fraud is that it will lead consumers to develop a

baseline level of distrust in food product labeling [5], which will continue to affect consumer

behavior long after a documented incident of food fraud occurs. Interest in this question has

been heightened by increases in scientific and media attention to food fraud incidents. Accord-

ing to the United States Pharmacopeial Convention (USP), which monitors food fraud inci-

dents, the total number of food fraud incidents in the two years from 2011 to 2012 was 60

percent as high as in the three decades between 1980 and 2010, while media coverage of food

fraud incidents were nearly 80 percent as high [6] [7]. As more consumers become exposed to

regular reports about food fraud incidents, it may affect their subjective perception that food

products are mislabeled, leading them to maintain behaviors that they adopted to avoid sus-

pected fraudulent products over long periods of time that previously only would have occurred

in response to a specific food fraud incident.

Despite growing evidence of the widespread occurrence of food fraud, there is a paucity of

empirical work documenting the impacts of fraudulent producer behavior in food markets on

consumer decision-making. The empirical research that does exist is either experimental, with

researchers directly exposing participants to information [8] [9], or tied to specific mislabeling

events [10]. For instance, [10] use scanner data to examine German consumer behavior before

and after a food fraud event that received extensive media attention in Germany. In the experi-

mental literature, [8] studied hypothetical ready-to-eat meal choices of consumers across six

European countries after the horsemeat scandal that occurred in Europe in 2012 in an online

experiment and [9] estimated consumer response to exposure to food fraud information in an

incentivized economic valuation experiment. A recently published study surveyed consumers

on their opinions about food fraud [11]. In each of these studies, authors document that con-

sumers are highly concerned about food fraud. [11]find that consumers develop strategies to

avoid fraudulent food products and [9]results even suggest that food fraud information spe-

cific to products from one country spills over to products from other, unimplicated countries.

In this research, we address the effect of prior exposure to information about food fraud on

consumer behavior in an economic valuation experiment. An experiment offers researchers

the opportunity to generate data that would be difficult or impossible to obtain from secondary

sources. To examine whether individuals begin to behave differently after exposure to food

fraud incidents, it is vital to have a measure of individuals’ prior exposure to food fraud, which

would typically be an unobserved variable in data generated in real-world settings. For

instance, in the study by [10], which used supermarket scanner data, the authors constructed

an index of media coverage of the relevant food fraud incident because no information was

available about whether each individual whose decisions were captured in the data had seen

information about the food fraud event. The experimental setting, on the other hand, permits

the researchers to directly elicit data on participants’ prior exposure to information about food

fraud incidents.

This valuation experiment features two rounds of elicitation of participants’ willingness to

pay (WTP) for a food product that has frequently been identified in food fraud articles: extra

virgin olive oil (EVOO). When the first round of WTP elicitation occurred, participants had

received no indication that food fraud would be a topic of interest in the study. After partici-

pants submitted their valuation in the first round, they completed a short survey that included

questions about prior knowledge of any—not solely EVOO-related—food fraud incidents.

Does prior knowledge of food fraud affect consumer behavior?

PLOS ONE | https://doi.org/10.1371/journal.pone.0225113 December 3, 2019 2 / 14

which was provided by IANR, UNL. The funder had

no role in study design, data collection and

analysis, decision to publish, or preparation of the

manuscript.

Competing interests: The authors have declared

that no competing interests exist.

Upon completion of this survey, participants then read a short article about EVOO mislabeling

incidents. Next, participants submitted their valuation for EVOO again.

If exposure to food fraud information influences consumers persistently, we expect to

observe two patterns in consumer behavior, which would be observable in data generated in a

valuation experiment involving rounds of bidding before and after the receipt of information

about food fraud. These expected patterns constitute the two hypotheses we examine in this

article. Our first hypothesis is that consumers with prior knowledge of food fraud value the

EVOO less on average than consumers without prior knowledge of food fraud at baseline (that

is, in the absence of specific food fraud information). Our second hypothesis is that partici-

pants with prior knowledge of food fraud respond less to the information about food fraud.

We examine differences in behavior between individuals with prior knowledge of food

fraud, or knowledgeable consumers, and those without prior knowledge of food fraud,

unknowledgeable consumers, in two ways to evaluate whether previous exposure to food fraud

information affects long-term consumer valuation of food products. First, we compare the val-

uation of EVOO for knowledgeable and unknowledgeable participants before they had

received any indication that the experiment involved mislabeling or food fraud. Because par-

ticipants had not received any materials that even mentioned food fraud, differences in valua-

tion between knowledgeable and unknowledgeable participants, controlling for variation in

individual characteristics, should be driven by differences in the consumers’ own background

knowledge and subjective estimates of the probability that food is fraudulently labeled. Second,

we examine how knowledgeable and unknowledgeable participants update their WTP after

receiving information about food fraud in EVOO markets. We expect that knowledgeable par-

ticipants should change their WTP less than unknowledgeable participants.

Experimental design and procedure

We received clearance from the University of Nebraska-Lincoln (UNL) Institutional Review

Board to conduct this research (20170616958 EX). The design of the experiment did not

include deception of research subjects. The experiment was conducted in the Experimental

and Behavioral Economics Lab at the University of Nebraska-Lincoln between September and

November 2017. Since olive oil is one of the food categories most vulnerable to food fraud

(Johnson 2014) and incidents of Italian olive oil fraud have been well documented [12] [13],

Italian EVOO was chosen for this study. We recruited olive oil consumers by posting flyers in

supermarkets and specialty food stores that provided information about how to register to par-

ticipate in the experiment. A total of 107 olive oil consumers participated in this study. Written

consent from study participant was obtained after explaining the laboratory experiment proce-

dure. Each participant received a $30 participation fee, which was paid in cash when the exper-

iment was completed. The experiment was programmed and delivered using Qualtrics

(https://www.qualtrics.com/).

To test our hypotheses about persistent changes in consumers’ expectations about the

veracity of food product claims due to previous exposure to food fraud information leading to

behavior change, we designed a multi-stage laboratory valuation experiment. After researchers

led participants through an explanation of how the laboratory valuation experiment worked

and a practice experiment with candy, participants valued Italian EVOO in a binding experi-

mental auction. The first round of value elicitation occurred prior to any mention of food

fraud or mislabeling.

After participants had submitted their valuations, they completed a short survey, which

included a question about whether participants had been exposed previously to information

about food fraud: “Had you heard about food fraud before coming to the study today?” If

Does prior knowledge of food fraud affect consumer behavior?

PLOS ONE | https://doi.org/10.1371/journal.pone.0225113 December 3, 2019 3 / 14

exposure to food fraud information causes persistent changes in consumer valuation of prod-

ucts, knowledgeable consumers should submit lower pre-information bids for the EVOO.

Next, all participants read a short article about incidents of mislabeling in the Italian olive oil

market (see Appendix). At this point in the experiment, all participants had been exposed to

information about food fraud, but the effect of the information provided in the experiment dif-

fers by consumer type. For unknowledgeable consumers, the text provides novel information

about the existence of food fraud, while for knowledgeable consumers, the particular informa-

tion—mislabeling scandals in the Italian EVOO industry—may be new, but the existence of

food fraud is not. After reading the text about Italian EVOO mislabeling, participants then

completed a second round of valuation of EVOO. Changes in valuation bids between the first

and second round provide data to test our second hypothesis. Because the EVOO mislabeling

text affects knowledgeable and unknowledgeable consumers’ information sets differently, we

expect that knowledgeable consumers’ bids will change less than unknowledgeable consumers’

bids in the second round of bidding.

We used the demand-revealing Becker-DeGroot-Marschak (BDM) mechanism [14] to

elicit consumers’ valuation of Italian EVOO. In the BDM mechanism, subjects submit a bid,

representing their maximum WTP, for a good that is presented to them by the experimenter.

After the subject has submitted their bid, an “experiment” price is randomly drawn from a dis-

tribution of prices. If the bid is higher than the randomly drawn experiment price, the partici-

pant purchases the good but pays only the experiment price. If the bid is lower than the

experiment price, the participant does not purchase the good. Therefore, the amount the sub-

ject pays is independent of their bid, creating an incentive to value the product truthfully [14].

One of the advantages of the BDM mechanism is that it eliminates the possibility of bid affilia-

tion among participants [15]. Bid affiliation describes a situation in which participants’ bids

become increasingly similar over multiple rounds of an experimental auction. While in other

experimental auctions, such as the Vickrey Auction [16] or random nth price auction [17],

participants’ learn the winning bid—which identifies part of the bid distribution, the random

experiment price in the BDM mechanism obviates bid affiliation.

Since the main objective of this study is to evaluate long-term effects food fraud events

on consumer behavior by examining differences in the WTP of both consumers with prior

knowledge and consumers without prior knowledge of food fraud across two informational

conditions, avoiding bid affiliation is important. The threat of bid affiliation is particularly pro-

nounced when some participants are unfamiliar with (or uninformed about) a product or

attribute [18], though other researchers have documented bid affiliation even in experimental

auctions for familiar products [15].

To avoid bid reduction in multi-unit auctions, at the end of the experiment, one round and

one EVOO was randomly selected for each participant. The participant’s WTP for that EVOO

was compared to the randomly drawn experiment price to determine whether the participant

would purchase the EVOO or not.

To account for potential differences in response to information about food fraud at differ-

ent price levels, participants valued a high-priced and a low-priced Italian EVOO. The shelf

prices of the high- and low-priced Italian EVOOs were $29 and $9, respectively, but partici-

pants were informed of a range of prices in which the bottles were sold. Participants were told

that one EVOO was sold in the $25–30 price range, while the other was sold in the $5–10 price

range. The size of each EVOO bottle was 500 ml (see Table 1).

Once all of the participants in a session had arrived at the laboratory, a researcher explained

the experimental procedure. After completing a practice round to familiarize participants with

the valuation mechanism and the computer interface, the experiment began. In the first

round, participants were asked to submit their maximum WTP for the two different bottles of

Does prior knowledge of food fraud affect consumer behavior?

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Italian EVOO. Note that at this stage participants had not received any information about

food fraud. Participants viewed the images of high- and low-priced Italian EVOO bottles on

the computer screen. The country of origin, bottle size, and shelf price range were displayed

alongside the images of the bottles. The EVOO bottles featured in the experiment were dis-

played in a random order to eliminate order effects. After bidding on both bottles of EVOO,

participants completed a short survey on prior knowledge of food fraud and their perceptions

of food fraud. This short survey was conducted after participants submitted their first-round

bids in order to avoid unintentionally priming them to think more about the possibility

that the products in the experiment might be mislabeled than they would under normal

conditions.

Prior to the second round of bidding, participants read an article about the Italian olive oil

industry and mislabeling scandals. After reading information about food fraud in the Italian

olive oil industry, participants again submitted bids for the same set of Italian EVOO bottles.

This was followed by surveys regarding demographic characteristics (e.g., age, gender, income,

and education level) and olive purchasing behavior (e.g., types of olive oil purchased, quantity

consumed per month, and average price spent per bottle). After the completion of the surveys,

the random experiment price and EVOO bottle were drawn to determine the outcome of the

experiment for each subject.

Descriptive statistics and estimation strategy

Slightly more than one-third (36 percent) of participants reported having prior knowledge of

food fraud, while 64 percent of participants reported no knowledge of food fraud. Table 2 sum-

marizes data on participants’ pre- and post-information WTP for Italian EVOO and their

prior knowledge of food fraud. The unconditional (i.e., pooled across price levels) mean WTP

for Italian EVOO was approximately $10. Participants’ mean WTP for high-priced Italian

EVOO was $18.54 before receiving information about Italian olive oil fraud; the average WTP

decreased to around $10.36 after consumers were exposed to the information about Italian

Table 2. Summary statistics of willingness to pay for extra virgin olive oil.

Variable Mean SD Min Max

WTP overall 10.09 7.76 0 32

High-Priced EVOO

Before receiving olive oil fraud information 18.54 7.60 3 32

After receiving olive oil fraud information 10.36 7.01 0 26

Low-Priced EVOO

Before receiving olive oil fraud information 7.53 3.14 1.2 15

After receiving olive oil fraud information 3.91 2.89 0 12

Source: Data from the experiment

https://doi.org/10.1371/journal.pone.0225113.t002

Table 1. Descriptive information of olive oil used in the experiment.

Type of EVOO Bottle Size Shelf Price

Italian High-priced EVOO 500 ml $29

Italian Low-priced EVOO 500 ml $9

Notes: Prices of Italian EVOO reflect non-sale shelf prices observed in the study area during the data collection

period.

https://doi.org/10.1371/journal.pone.0225113.t001

Does prior knowledge of food fraud affect consumer behavior?

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olive oil fraud. Mean WTP for low-priced Italian EVOO fell from $7.53 before information

about food fraud to $3.91 afterwards.

Table 3 shows the summary statistics of participants’ demographic characteristics, olive oil

consumption habits, and perceptions of the frequency of food fraud occurrence. We examine

these variables separately for consumers with and without prior knowledge of food fraud.

Table 3 also reports the Fisher’s Exact Test to investigate whether consumers with prior knowl-

edge of food fraud (knowledgeable) are similar to consumers without prior knowledge

(unknowledgeable) in terms of demographic characteristics and olive oil consumption habits.

The composition across the groups knowledgeable and unknowledgeable is unbalanced only in

terms of age (p = 0.02). There is also a marginally significant difference in olive oil consump-

tion between knowledgeable and unknowledgeable consumers (p = 0.07). These two groups

are balanced in terms of all other individual characteristics (Table 3).

To examine the role of prior knowledge of food fraud in consumers’ baseline WTP for

EVOO and response to food fraud information, this study employs regression techniques that

make use of the panel structure of this dataset. We regress consumers’ WTP for Italian EVOO

on the dummy variables that capture differences in information, price level, and prior knowl-

edge while taking into account control variables, including demographic characteristics, per-

ceptions of the frequency of food fraud, and olive oil purchasing behavior:

WTP

¼ b

þ b

Inf fraud

þ b

Highpriced EVOO

þ b

Highpriced EVOO

 Inf fraud

þ b

Knowledgeable

þ b

Knowledgeable

 Inf fraud

þ X

θ þε

ð1Þ

where WTP

denotes the WTP of participant i observed at time t (t = 0 represents the pre-food

fraud information stage; t = 1 represents the post-food fraud information stage). Inf_fraud

a dummy variable that captures the effect of receiving information about Italian olive oil fraud

on WTP. The dummy variable Highpriced_EVOO

identifies high-priced bottles of EVOO

(1 = high price; 0 = low price), while Knowledgeable

captures participants with prior knowl-

edge of food fraud (1 = prior knowledge; 0 = no prior knowledge). Further, X

is a vector of

participant characteristics and ε

is an i.i.d. standard normal error term.

The panel regression model in Eq 1 includes four observations for each of the 107 partici-

pants bidding for Italian EVOO bottles (both high- and low-priced) before and after receiving

information about Italian olive oil fraud, resulting in 428 total bids. Since the laboratory

experiment is designed in such a way that all participants are exposed to the same information

treatment, and the values of the variables related to consumers’ characteristics do not

change across time (i.e., these variables are time-invariant), the random effects (RE) panel

specification is appropriate. We use standard errors that are cluster-corrected at the individual

level.

Results

Table 4 presents the results of the panel regression model analyzing the effect of prior knowl-

edge of food fraud on consumers’ response to food fraud incidents. Regression results show

that the WTP of knowledgeable consumers is $2.09 lower than the WTP of unknowledgeable

consumers in the round of bidding that occurred before participants were exposed to food

fraud information. This result is statistically significant at the 1% level. After receiving infor-

mation about Italian olive oil fraud, unknowledgeable consumers’ valuations for low-priced

Italian EVOO decreased by $4.42, which is statistically significant at the 1% level, while their

WTP for high-priced Italian EVOO fell by $9.07. While both knowledgeable and unknowl-

edgeable participants decreased their valuations after being exposed to information, knowl-

edgeable participants reacted less to the information. Unknowledgeable participants’ bids fell

Does prior knowledge of food fraud affect consumer behavior?

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Table 3. Summary statistics of control variables.

Variables Group Total

(N = 107)

p-value

Unknowledgeable

(N = 69)

Knowledgeable

(N = 38)

Gender 0.54

Male 38% 45% 40%

Female 62% 55% 60%

Education 0.26

Graduate Degree 25% 39% 30%

Bachelor’s degree 19% 24% 21%

Associate Degree/Some College 27% 16% 23%

No College 29% 21% 26%

Age 0.02



19–35 years 94% 76% 88%

36–49 years 4% 19% 9%

50+ 2% 5% 3%

Income 0.14

<60,000 68% 63% 67%

60,000–99,999 6% 16% 9%

100,000 and above 7% 13% 9%

Prefer not to answer 19% 8% 15%

Olive Oil Consumption (monthly) 0.07



Greater than 1 liter 6% 16% 9%

1 Liter 94% 84% 91%

Types of Olive Oil Purchased 0.39

EVOO 64% 74% 67%

Other Types but Not EVOO 36% 26% 33%

Price Paid Per Bottle (on average) 0.49

 10$ 54% 50% 52%

10$–20$ 42% 50% 45%

20$ 4% 0% 3%

Participant Perceptions

% of mislabeling

0.16

0–50% 97% 89% 94%

51–75% 3% 8% 5%

75% 0% 3% 1%

Participant Perceptions

% of Domestically (U.S.) Produced Food Products Tested by US Food and Drug Administration (FDA)

0.90

0–50% 50% 52% 50%

51–75% 31% 32% 31%

75% 19% 16% 19%

Participant Perceptions

% of Imported Food Products Tested by US Food and Drug Administration (FDA)

0.78

0–50% 61% 61% 61%

51–75% 22% 26% 23%

75% 17% 13% 16%

Note: The reported p-values are from Fisher’s Exact Test.



: p5%,



: p10%.

https://doi.org/10.1371/journal.pone.0225113.t003

Does prior knowledge of food fraud affect consumer behavior?

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by $2.27 more than knowledgeable participants’ bids, which is statistically significant at the 1%

level.

Fig 1 depicts mean estimated WTP averaged across low and high-priced EVOOS of partici-

pants with and without prior knowledge of food fraud before and after receiving Italian olive

oil fraud information. As depicted in Fig 1, before receiving any information about Italian

olive oil fraud, participants who reported prior knowledge of food fraud were willing to pay,

on average, $1.60 less for Italian EVOO than participants without prior knowledge of food

fraud. This result is statistically significant at the 5% level. However, after receiving informa-

tion about Italian olive oil fraud, there is no statistically significant difference in WTP of partic-

ipants with and without prior knowledge of food fraud. In other words, before being treated

with Italian olive oil fraud information, knowledgeable consumers bid significantly less than

unknowledgeable consumers. After being treated with Italian olive oil fraud information, there

is no meaningful difference in WTP. Therefore, Fig 1 further reinforces our key results that

Table 4. Effects of prior knowledge of fraud on consumers’ response to food fraud information.

Independent variables WTP for Italian EVOO

Inf_fraud (1,0) -4.418



(0.456)

Highpriced_Evoo (1,0) 11.016



(0.622)

Highpriced_Evoo



Inf_fraud -4.565



(0.550)

Knowledgeable -2.089



(1.077)

Knowledgeable



Inf_fraud 2.269



(0.900)

Olive Oil Consumption Behavior

Olive Oil Type (1,0) -0.369 (0.891)

Liters Consumed per Month -0.0004 (0.0001)

Price Paid per Bottle (on average) 0.279



(0.122)

Perceptions of Food Fraud

Percentage of Mislabeling 0.032 (0.023)

Percentage of Domestically (U.S.) Produced Food Products Tested by FDA 0.001 (0.016)

Percentage of Imported Food Products Tested by FDA 0.029 (0.20)

Demographic Characteristics

Gender (1,0) -0.982 (0.802)

Age 0.064 (0.086)

Education (reference: no college education)

Graduate Degree -1.594 (1.390)

Bachelor’s degree -0.916 (1.167)

Associate Degree/Some College -0.486 (1.142)

Income (reference: prefer not to answer)

<60,000 0.433 (1.033)

60,000–99,999 1.486 (1.700)

100,000 and above 2.461 (1.644)

Constant 2.584 (2.879)

0.53

Wald χ

574.90

Number of observations 428

Note:



: p1%,



: p5%,



: p10%.

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prior exposure to information about food fraud is an important factor in explaining consumer

behavior in the presence of food fraud.

Discussion and conclusions

This laboratory valuation experiment examines the role of prior knowledge of food fraud on

knowledgeable (those with prior knowledge) and unknowledgeable (those without prior

knowledge) consumers’ baseline valuation of products—perhaps due to persistent, long-term

changes in their subjective probability of products being mislabeled—and on consumers’

response to food fraud information. We use participants’ bids in the first round, before any

mention was made of food fraud or mislabeling, to examine differences in baseline valuation

of EVOO between knowledgeable and unknowledgeable consumers. We then examine

changes in bids after participants read a text about food fraud incidents in the Italian olive oil

industry to evaluate how knowledgeable and unknowledgeable consumers respond to

information.

The analyses of the data show that before receiving information about Italian olive oil

fraud, knowledgeable participants’ WTP for Italian EVOO is significantly lower than

unknowledgeable participants’ WTP. This result indicates that knowledgeable participants

(i.e., consumers with prior knowledge of food fraud) partially account for the possibility of

food fraud in their initial bids. The analysis also shows that after receiving information about

Italian olive oil fraud, participants reduced their valuation of Italian EVOO, irrespective of

their prior knowledge of food fraud. However, unknowledgeable participants decreased their

valuation more than knowledgeable participants after exposure to Italian olive oil fraud infor-

mation, indicating that knowledgeable participants are less responsive to new information

about food fraud incidents. Both of these patterns are consistent with food fraud information

having persistent, long-lasting effects on individuals’ perceptions of the credibility of producer

claims about credence or experience attributes. Our findings suggest that knowledgeable par-

ticipants have already changed their behaviors to account for the possibility that olive oil—a

product that has had many widely publicized mislabeling scandals (e.g., [12], [13], [19])—is

Fig 1. Mean estimated WTP of participants with and without prior knowledge of food fraud before and after

receiving information about mislabeling scandals in the Italian EVOO industry, averaged across low-price and

high-price-range EVOOs with 95% confidence intervals.

https://doi.org/10.1371/journal.pone.0225113.g001

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fraudulently labeled and therefore react less to Italian olive oil fraud information than

unknowledgeable participants.

Do consumers with prior knowledge of food fraud incidents behave differently? Since the

intensity and frequency of food fraud have been on the rise and the media cover these scandals

widely [7], the importance of this question has grown significantly. Our study finds that

knowledgeable participants accounted for the possibility of food fraud before they had received

any indication that the experiment involved mislabeling or food fraud. This behavior suggests

that their baseline level of distrust in food product labeling differs from unknowledgeable par-

ticipants. Moreover, they were less reactive to food fraud incidents since they already consid-

ered this possibility in their initial bids. Results of this study suggest that exposure to regular

reports about food fraud may affect consumers’ subjective perception of the accuracy of food

labels. As a result, in the presence of food fraud scandals, consumers with prior knowledge of

food fraud behave differently than consumers without prior knowledge of food fraud.

The pattern of results suggests that the increasing amount of media attention on food fraud

incidents—potentially resulting in a growing percentage of the population internalizing the

possibility of food fraud—could lead to the lemons problem [20]. If consumers exposed to

information about food fraud incidents come to distrust product labeling, their valuation of

these products is likely to decrease, which may mean that higher quality products will not be

able to compete in the market if producers are unable to effectively signal that quality to con-

sumers. While a solution to the asymmetric information problem already nominally exists in

the market for EVOO—that is, quality certification, food producers are able to fraudulently

label their products due to a lack of monitoring and oversight by the organizations responsible

for certification systems, which may be governmental or private entities. Increasing the

amount of funding available to monitor for mislabeled or adulterated products may be neces-

sary to reduce the number of incidents of food fraud and maintain consumer trust in food

labeling systems.

This study also contributes to a growing area of research that examines the effect of individ-

uals’ home-grown knowledge on economic decision-making. Most of this literature examines

the effect of consumer knowledge in markets that feature informational complexity, such as

branded vs. unbranded products (e.g. [21]), investment decisions ([22]; [23]), or wine ([24]

[25]). For instance, [2]find that high-knowledge consumers respond more to objective infor-

mation about wine than low-knowledge consumers. While our results are contrary to [25]—

knowledgeable consumers in our study respond less to information, having apparently already

accounted partially for the information—there is an important distinction. In the current

research, consumers’ prior knowledge about fraudulent food labeling appears to spill over to

other food products—an effect documented in [9] in the context of decreases in consumer val-

uation of olive oils from different countries in response to negative information about one

country—while [25] examined consumers’ changing valuation for wine in response to receipt

of objective information commonly provided on wine labels.

There are a few limitations to our study. As this research represents a first pass at examining

whether previously encountered food fraud information influences consumer behavior, we do

not have data on certain variables that would allow us to more accurately describe the relation-

ship between exposure to food fraud information and subsequent consumer behavior. For

instance, we did not collect information about how many times participants had been exposed

to information about food fraud, how long ago they had been exposed, or what specific food

industries were implicated in the food fraud information they had encountered. Each of these

may be an important determinant of persistent changes in consumer response to information.

Consumer behavior following repeated exposure to information about food fraud incidents

may be nonlinear, which could result in significant increases in consumer distrust of food

Does prior knowledge of food fraud affect consumer behavior?

PLOS ONE | https://doi.org/10.1371/journal.pone.0225113 December 3, 2019 10 / 14

labeling systems after observing a particular number of food fraud incidents. Future research

should focus on teasing out the relationship between number of exposures and relevant out-

comes, such consumers’ subjective expectations of the trustworthiness of product labeling.

The temporal proximity of exposure to food fraud information may also impact consumer

response. There is relatively little relevant research in this area, though there are two studies

that have examined the effect of time on information response in the context of food safety

[26] and controversial technologies [27]. (Dillaway, Messer, Bernard, & Kaiser, 2011) find that

the effect of a food safety event on consumers’ WTP for chicken persists over time, while

changes in WTP detected immediately after a single exposure to information about the use of

controversial technologies, such as GMOs and meat irradiation, had eroded in a follow-up lab

session [27]. There may also be an interaction effect between the number of exposures to food

fraud information and the temporal distribution of those exposures on consumers’ behavior.

More work needs to be completed to understand differences in the effect of information on

consumer decision-making over time.

Consumers may also respond differently to food fraud information based on the relevance

of the product implicated in the scandal to them. In this research, we screened participants to

ensure that they purchased and consumed olive oil, but we did not collect information about

what products they had encountered food fraud information about. Participants who had

previously read reports about the misrepresentation of seafood [28] may have valued olive oil

differently in the pre-information round than participants who had read about olive oil misla-

beling. More generally, it is possible that the probability that information about food fraud

events affects one’s long-term behavior may be affected by the relevance of the product cate-

gory to the individual, perhaps because individuals are more likely to pay attention to informa-

tion that is relevant to them [29].

A related issue that may have implications for these results is highlighted in a recent article.

Based on survey results, Helen et al. [11] report that consumers develop strategies to avoid

fraudulently labeled food products. In our experiment, we, the researchers, determined which

olive oils the participants observed and valued. Imposing exogenously selected products on

consumers permits identification of the effect of food fraud information on changes in con-

sumer valuation but it does so only in the context of that exogenously selected product. If con-

sumers were able to engage strategies they had developed that might involve substituting away

from low-cost, imported bottles to more expensive but—subjectively—more trustworthy bot-

tles, there would be a shift in consumption, but not necessarily a drop in quantity or value of

olive oil purchased. We have two pieces of evidence that this may be a relevant consideration

from our sample. First, there was not a significant difference in the average amount knowl-

edgeable and unknowledgeable consumers spent per bottle on EVOO, suggesting that knowl-

edgeable consumers may have adopted strategies to avoid mislabeled EVOO in the field.

Secondly, participants believed that more domestically produced products are tested by the

federal government than imported products, which would likely reduce their subjective expec-

tation of the amount of mislabeling in domestic products. Additionally, [9] find that while

food fraud information about olive oils from one country spills over onto consumer WTP for

olive oils from other countries, domestically produced olive oil experiences the lowest drop in

value. However, an experiment that provides room for consumers to respond strategically to

negative information may yield additional important insights into the effects of food fraud.

This article is an initial step in determining important factors affecting consumers’ response

to food fraud scandals. Our findings indicate that prior exposure to information about food

fraud is an important factor in explaining consumer behavior in the presence of food fraud.

Future research in this direction can further refine estimates of the effect of exposure to food

Does prior knowledge of food fraud affect consumer behavior?

PLOS ONE | https://doi.org/10.1371/journal.pone.0225113 December 3, 2019 11 / 14

fraud information and identify conditions that influence the effect of information on con-

sumer behavior.

This study shows that prior knowledge of food fraud is related to baseline valuation of a

product category—though not a specific brand—that has been implicated in food fraud scan-

dals and to updating in response to new information. We have also identified several future

directions of research on consumer behavior in the presence of food fraud that should be pur-

sued. Although results show that consumers with prior knowledge of food fraud are less reac-

tive to olive oil fraud information—because it appears that they may have already accounted

for the possibility of food fraud occurring, we need further research to explore why they

respond differently. Furthermore, we need further studies to understand how consumers’

response to food fraud will change over time and with repeated exposure to information about

food fraud incidents.

Appendix

Article on Italian olive oil fraud

Italian olive oil industry and labeling scandals. Italy, along with Greece, Spain, and the

U.S., is one of the leading global producers of olives and olive oil. Italy accounts for 16% of the

total olive production in the world. The annual per capita olive oil consumption in Italy is

approximately 12.35 KG. (FAOSTAT, 2013). The top Italian olive oil production regions are

Puglia, Tuscany, Umbria, and Liguria.

While Italy is famous for olive oil, there have been allegations that Italian olive oil producers

do not adhere to olive oil labeling standards, labeling olive oils as extra virgin that do not meet

the standards that define extra virgin olive oils. Over 10% of Italian brands commonly sold in

the U.S. market failed repeatedly to meet extra virgin olive oil standards ("Evaluation of Extra

Virgin Olive Oil Sold in California", UC Davis, 2011). In 2015, Italian anti-fraud authorities

investigated top Italian olive oil companies for mislabeling. They found that 9 out of the 20

largest brands mislabel low-quality olive oil as extra-virgin olive oil ("Italian olive oil scandal:

top brands ‘sold fake extra-virgin´´´, The Telegraph, November 11, 2015). Moreover, some

producers use chemicals to cover up bad quality oils. It is not the first time that the Italian

olive oil industry has come under scrutiny for fraud. In 2012, Italian anti-fraud authorities also

found that the largest Italian olive oil producer had mislabeled domestic high-quality extra vir-

gin olive oil with less expensive imported olive oil (The Guardian, November 11, 2015).

Italy is one of the top exporters of olive oil in the world. However, since the intensity and

frequency of olive oil fraud has been on the rise, Italy faces a damaged reputation and eco-

nomic losses. For this reason, Italy has established a special unit devoted to food fraud.

Supporting information

S1 File.

(XLSX)

Author Contributions

Conceptualization: Syed Imran Ali Meerza, Christopher R. Gustafson.

Data curation: Syed Imran Ali Meerza.

Formal analysis: Syed Imran Ali Meerza.

Funding acquisition: Christopher R. Gustafson.

Does prior knowledge of food fraud affect consumer behavior?

PLOS ONE | https://doi.org/10.1371/journal.pone.0225113 December 3, 2019 12 / 14

Methodology: Syed Imran Ali Meerza.

Project administration: Syed Imran Ali Meerza.

Resources: Christopher R. Gustafson.

Software: Syed Imran Ali Meerza.

Supervision: Christopher R. Gustafson.

Validation: Syed Imran Ali Meerza, Christopher R. Gustafson.

Writing – original draft: Syed Imran Ali Meerza, Christopher R. Gustafson.

Writing – review & editing: Syed Imran Ali Meerza, Christopher R. Gustafson.

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