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EMAC 2024 Annual


The Cheap = Poor Labor Conditions Lay Belief and Its Impact on Preferences for Production Method
(A2024-119546)

Published: May 28, 2024

AUTHORS

Almira Abilova, Erasmus University Rotterdam; Mirjam Tuk, RSM Erasmus University

ABSTRACT

Consumers come across low prices daily. Yet, little research exists on consumer reactions to cheap products. While rational economic theory would predict strong preferences for cheap products, we posit that cheap products can also trigger inferences of poor labor conditions. We argue that these inferences lead to the experience of moral outrage and show that this, in turn, (a) leads to a relatively stronger preference for cheap products to be produced by automated machinery vs. human labor and (b) reduces willingness-to-buy for cheap products that are made by human labor. Our findings show that this effect is specific to cheap products and diminishes when addressing labor concerns. Documenting the “cheap = poor labor conditions” belief underscores consumer ethical concerns and aids companies in making informed decisions between cost and ethics in production strategies.