ScholarWorks@경상국립대학교

초록

Although additional information is usually assumed beneficial, information sometimes misleads consumers and causes negative effects. Consumers’ purchasing behavior are based on the information they have, and thus they fail to optimally consume commodities when they have incorrect information. Excessive media reports on food contamination incidents lead to the unnecessary reduction of related goods and result in consumers’ welfare loss. The purpose of this study is to analyze consumers’ welfare loss that resulted from being unable to optimally consume meats because of imperfect information that there might be BSE contaminated beef in Korea in 2001. The results show that a consumer suffers monthly welfare loss of between 7 and 4,409 won due to unnecessary reduction of beef consumption as a result of imperfect information. This welfare loss is referred to as ‘cost of ignorance’ or value of information.

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