Blogs & Comment

Are companies responsible for consumers' mental errors?

Is fair-trade chocolate lower in calories? No. Whose fault is it if consumers think it so?

Who is responsible for a consumer’s subconscious and erroneous conclusions about a particular product? What if a manufacturer honestly and accurately says “our product does X” and consumers mistakenly believe, as a result, that the product also does Y?

Case in point: a study was recently reported, indicating that consumers are more likely to perceive chocolate as low in calories when they are told that it is fairly-traded. This is a great example of the “halo effect,” according to which humans have a tendency to attribute a variety of unrelated positive attributes to any person or thing that they perceive in a positive light to begin with.

Now, it’s clear that consumers are being led astray, here, though presumably that deception is not the intention of the sellers of fair-trade chocolate. But, on the other hand, whatever their intentions in the past, the sellers of fair-trade chocolate now know that consumers are susceptible to this error. Do they now have a responsibility to disabuse consumers of this particular misconception about chocolate?

Now hold on, you say. Companies that label and advertise their products accurately and honestly can’t be responsible for every crazy, false idea that enters a customer’s head. Surely companies can assume a degree of common sense; and surely anyone with a bit of common sense knows that there’s no link between fair-trade and calories.

(It’s worth noting that companies sometimes do see fit to warn consumers about matters that ought to be common sense: “Don’t use hairdryer in tub,” “Results are not typical,” “Keep knives away from children,” etc.)

But here’s the problem. The halo effect is a species of cognitive bias, which is the term applied to any of a large number of pervasive, subconscious mental leanings that tend to lead human reasoning astray. When subject to cognitive biases, humans tend to make decisions that are not rational, not in line with their own values and preferences. The point here is that no one is actually saying to themselves, “Gee, this is fair-trade chocolate, and therefore it must be low in calories.” That would be insane. But cognitive biases don’t work by rational processes; indeed, they short-circuit rational thought. That’s the whole problem.

So, do such effects, when discovered, result in new obligations for companies? Maybe. Sometimes. At least, if the effects of a particular cognitive bias are significant. The example cited above is pretty trivial—presumably the effect in question is not sufficiently powerful to send droves of consumers onto chocolate-eating binges. But more serious cases are easy enough to imagine. And surely some bit of responsibility comes with knowledge: companies tend to have sophisticated knowledge about their products, and are more likely than consumers to know when a dangerous bias is in the offing.

But the real challenge—for both companies and consumers—is that these sorts of subconscious effects are legion. And as more and more of them come to light, we’re going to increasingly recognize just how little we understand our own minds. Bit by bit, whatever is left of the idea that market exchanges occur under conditions of full information is going to evaporate. What that will mean for business ethics is hard to say; but the time to start thinking about it is now.