Discounting Spotted Apples: Investigating Consumers' Willingness to Accept Cosmetic Damage in an Organic Product

The appearance of organic produce is often less than perfect because of limited methods of avoiding plant diseases. We combine hypothetical and real auction mechanisms to investigate how cosmetic damage affects Consumers' willingness to pay for apples. We find that 75% of the participants are willing to pay more for organic than for conventional apples given identical appearance. However, at the first sight of any imperfection in the appearance of the organic apples, this segment is significantly reduced. Furthermore, the cosmetic damage has a larger impact on the willingness to pay for organic apples than for conventional apples.