Modelling reference-dependant and labelling effects in consumers' functional food choices

Now the utility function changes to: ui = u0 − pi −λplossi + pgaini +ε i ε → N (0,δ 2 ) Where plossi captures the difference between the reference price and the observed price when the observed price is above the reference point; pgaini captures the difference between the reference price and the observed price when the observed price is below the reference point; pi is the observed price for an in [...] Taking HBRF as the reference point and HBFF as the observed attribute, HBgaini captures the difference between the reference point and the observed attribute when the observed attribute is more than the reference point, which means HBFF − HBRF >0; HBlossi captures the difference between the reference point and the observed attribute when the observed attribute is less than the reference point, whi [...] Taking HBRF as the reference point and HBFF as the observed attribute, the item (HBFF−HBRF)*C represents the reference-dependent effects for the health benefit gain; and the item λ*(HBFF−HBRF)*C represents the reference-dependent effects for the health benefit loss. [...] If this is the case, we can see from the figure 4 that the utility curve for regular food lies completely above the utility curve for the functional food product. [...] A Comparison of Health Claims Regulation in the U. S. and Canada In making a decision regarding the consumption of functional food, consumers face two types of uncertainty: uncertainty about the health attributes of a specific food and uncertainty over future health outcomes.