Abstract
A signaling game is developed in order to derive the equilibrium conditions under which special interest groups (SIGs) involved in the controversial debate over genetically engineered (GE) foods have the incentive to truthfully reveal their information or spin facts regarding the health impact of GE foods. Consumers can choose to inspect information provided by SIGs at a cost. The risk of spinning facts is much higher for pro-GE groups, because if it turns out that a certain GE food is unsafe, the penalty will be severe. However, anti-GE groups can still spin facts at low risk even if consumers choose to inspect. This helps explain why some pro-GE groups, particularly the biotech industry, tend to remain silent. Revealing information regarding the safety of GE foods could be counterproductive given pre-existing public skepticism. Consumers may not make “better” decisions with more information provided because more information increases their inspection costs. When it is costlier for consumers to inspect, it is more likely that anti-GE groups will continue to spin facts about the negative health impact of GE foods.
Highlights
According to Food and Agriculture Organization (FAO) projections during the 2009 World Summit on Food Security, the world population will grow to 9.1 billion by 2050 and global food production will have to increase by 70 percent to meet increased demand (FAO, 2009)
The conditions supporting the equilibrium behavior are related to the payoffs to the players, the spin costs to special interest groups (SIGs), consumers’ inspection costs, and consumers’ updated beliefs after receiving messages provided by SIGs
This is improbable, in reality, because the spin costs for both pro-genetically engineered (GE) and anti-GE SIGs will generally be larger than their gain if they spin facts against their best interests
Summary
According to Food and Agriculture Organization (FAO) projections during the 2009 World Summit on Food Security, the world population will grow to 9.1 billion by 2050 and global food production will have to increase by 70 percent to meet increased demand (FAO, 2009). Z. Smith available for farming, and agricultural innovation and investment in new technology will be central to increasing global food production and food security. One of the major areas of research in agricultural innovation is the development of agricultural biotechnology that increases crop yield and crop resistance to pests, diseases, and extreme weather, reducing production costs and lowering food prices for consumers
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