Influence of Utilitarian and Hedonic Attributes on Willingness to Pay Green Product Premiums and Neural Mechanisms in China: An ERP Study

Abstract

Green consumption is expected to become a new driving force for sustainable economic growth. The production cost of green products leads to the existence of a green premium, which affects the willingness to pay for green consumption. Moreover, willingness to pay is influenced by the product’s own attributes, such as its hedonic and utilitarian attributes. Our study used the event-related potentials (ERPs) technique to investigate how product attributes and premiums affect information processing and subsequent decision-making by comparing consumers’ acceptance of hedonic and utilitarian green products with different levels of premiums. Behavioral results indicated that consumers were more willing to pay premiums for utilitarian attributes than for hedonic attributes. ERPs results showed that hedonic attributes induced a greater P2 component, suggesting that price increases for hedonic products elicited more cognitive attention in the early cognitive stage and that the high premium condition did not match the hedonic attributes. In the late cognitive stage, where the utilitarian attribute induced higher N4, the consumers used the green consumption concept as a reason to reduce the negative emotions generated by the hedonic attribute and thus were more willing to accept the green premium for the hedonic product. The findings can be used to explain the psychological and neural activities of consumers at different stages when faced with the degree of product attribute-premium and help companies optimize their pricing strategies by using green products’ attributes.