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If true, consumers who eat at McDonald's have not been given a free choice, and thus liability may attach.... Plaintiffs argue that McDonald's products have been so altered that their unhealthy attributes are now outside the ken of the average reasonable consumer.
One of the firms produces a healthy food without unhealthy attributes while the other firm makes decisions about the degree of unhealthy attributes in its product.
The parameter θ measures the degree of emotional guilt derived from consuming a good with unhealthy attributes.
Alternatively, it can be thought that θ denotes individual characteristics reflecting how unhealthy attributes affect consumer's health.
At the same time, as consumers are willing to pay higher prices for unhealthy products, firms will be interested in manufacturing products with higher levels of unhealthy attributes.
In this paper, we carry out a theoretical analysis of the strategic choice made by firms regarding the type of food they market when they face consumers who care about the healthy/unhealthy attributes of the product but incur in emotional/health costs when the food they consume has unhealthy attributes.
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The optimal level of the unhealthy attribute s* satisfies.
Figure 1 The optimal level of the unhealthy attribute.
Consumers value the unhealthy attribute (e.g. the product tastes better), but, at the same time, they feel guilty for consuming a good with a higher unhealthy attribute.
The optimal level of the unhealthy attribute is depicted in Figure 1 below.
Likewise, for a given c, the optimal level of the unhealthy attribute diminishes with d.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com