Spinning the Facts against Genetically Engineered Foods?
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.