A.

ABSTRACT
B. INTRODUCTION
I. Introduction of fashion industry:

Fashion has become an indispensable part of people’s daily lives for a long
time. It is not only about clothes and accessories but also a way for people to
show off their styles and personalities. Fashion development is diverse and
closely connected to people’s lives, from office attire to sportswear and
seasonal fashion. It meets every need and brings many advantages for
wearers. Moreover, this also represents the national identity and cultural
aspects of different countries and communities, creating a strong connection
between these people.

For those reasons, fashion has become one of the most important and rapidly
growing industries in the global economy. In 2023, its total global revenue was
1.7 trillion dollars, contributing to the global GDP of 2%. In addition, this
industry brings many economic benefits such as alleviating the unemployment
problem. The development of the fashion industry has resulted in a noticeable
rise in consumer needs, leading to an increase in demand for labor. As a result,
this helps diminish the unemployment rate, which has been a challenging issue
in many developing countries.

II. The popularity of fast fashion

With the rapid growth of social networks and e-commerce platforms, there are
more and more new and unique fashion trends, reaching a wider range of
customers. This has led to the emergence of fast fashion, having many positive
impacts on this big industry. With the ability to produce fast to catch up with
the latest trends and cheap prices, which is suitable for most consumers, fast
fashion has received a high level of interest from many people of all ages,
especially young people. This helps contribute significantly to the fashion
industry. In 2023, its total revenue was estimated to be 122 billion dollars and
is predicted to continue going up in the following years. According to
McKinsey&Company, clothing production doubled from 2000 to 2014, and the
number of garments purchased per capita between 2000 and 2014 increased
by about 60 percent.

The rise of fast fashion is closely associated with many famous brands such as
Shein, and Zara. These retailers have taken advantage of the online business
models combined with good marketing strategies, attracting a large number of
consumers. Shein, founded in China, is one of the largest online fast fashion
retailers all over the world. It is estimated to have 250 million downloads and
be available in more than 25 countries. According to Mobiloud, Shein’s total
revenue was approximately 24 billion dollars in 2022 with 880 000 online
orders per day.

Thanks to the extremely fast production cycle – only 3 days for the entire
process, these retailers can release hundreds or thousands of new fashion
designs within a short amount of time. Besides its fast production, its products
also attract customers by its affordable prices because they are made from
inexpensive materials and labor from developing countries. With all of those
advantages, this is why the number of people who favor fast fashion,
particularly Shein and other brands, is enormous.
Fast fashion has changed the way people consume fashion, changing from
seasonal shopping to continuous shopping. Instead of purchasing clothes in a
particular season or special occasion, the majority of people now buy clothes
continuously regardless of the time of the year. Furthermore, by understanding
their mindset of not wanting to miss out on trending styles, the retailers use
many advertising forms and design more new items to encourage these
consumers to buy more to catch up with the latest trends. Since the price of
each product is very low, many consumers have adopted a 'buy and throw
away' habit, using products only one or two times and buying just to follow
trends without truly needing them. Meanwhile, another factor contributing to
this is the short lifespan of trends, urging customers to shop more and more.
According to research, each fashion item is only worn 7 to 10 times, which is
lower 35% than it was 15 years ago.

III.What’s going on with textile waste lately?

Based on the 2015 consumption figures (Kerr & Landry, 2017), the fashion and
textile industry alone produces between an estimated 55 and 92 million tons of
waste annually. This also equals to wasting $400 billion worth of discarded
clothing every year, according to Ellen MacArthur Foundation, 2017. To put this
more clearly, for every second on average, one garbage truck of clothes is
burnt or sent to landfills (Reichart & Drew, 2019). Given how quickly fashion
trends are changing, more old apparel may be thrown away as a result of new
styles and variants.. This is among the causes of approximately two-thirds of
clothing production material that ends up in the trash within a year (McQuillan,
2019).

The data below shows how many tons of textiles were generated, recycled,
composted, combusted with energy recovery, and landfilled between 1960 and
2018 (EPA, 2023)
In 2018, around 17 million tons of textile waste were generated, with about 3.2
million tons were combusted (18.9% combustion rate), and 11.3 million tons
ended up in landfills (66.34% landfilling rate). Notably, only 2.5 million tons,
or 14.7% of the total were recycled. Regarding short lifespans of fast
fashion products, such a low recycling rate may pose difficulties while
decomposing clothing waste.

IV. Potential negative impact of fashion waste on the environment

Excessive amount of fast fashion items may cause negative externalities.
Synthetic textiles, such as polyester, nylon, and acrylic do not completely
dissolve when disposed of; instead, they break down into microplastic particles.
These microscopic plastics damage the ecosystem and remain intact in soil or
water for hundreds of years. A single load of polyester clothing can also leak
around 700,000 microplastic fibers into the home water supply during the

laundry process, according to data from the European Parliament in 2023.

Fig. 1 The textile supply chain's sources and pathways for microfibre transfer
(Liu et al., 2021).

Another negative externality of the fast fashion industry is that it consumes

resources such as water, energy, and chemicals to make garments. In 2019,
Reichart & Drew pointed out that producing a cotton T-shirt requires over 2,700
gallons of water, which is the amount of water a person drinks for two and a
half years. Additionally, for every year, the textile industry uses up 86 million
Olympic-sized swimming pools' worth of water resources (UNEP, 2023). Apart
from consuming resources excessively, producing and transportation of
clothing also produce significant CO2 emissions, hence contributing to global
warming. About 1.2 billion tons of CO2 are emitted yearly (Ellen MacArthur
Foundation, 2017), which account for almost 10% of global GHG emissions
(UNFCCC, 2018).
A bar chart conducted in 2021 by WRI & Aii shows that GHG emissions in 2030
can rise by about 54.9% compared to 2019, if there isn't a sustainable way to
produce textile products.

V. Negative impacts of Fast Fashion on society:

The fast fashion industry not only causes serious environmental hazards but
also creates pressing social issues such as unsafe working conditions and low
wages for workers in developing countries. Garment factories in nations like
Bangladesh, Vietnam, and India often operate under unsafe, dangerous
conditions. The collapse of the Rana Plaza building in Bangladesh in 2013,
which killed over 1,100 workers and injured around 2,500 more ( Wikipedia
about the Rana Plaza incident ), raises significant awareness of the public
about the disregard of this industry for labor safety. This tragic event
highlighted the industry’s neglect of workplace safety, not only in terms of the
physical environment but also concerning labor protection policies. The initial
contributions to the compensation fund for people suffering from this accident
were delayed as major brands failed to contribute on time, often only
responding after pressure from the international community. Consequently, the
victims had to endure long waiting periods before receiving reasonable
compensation. By October 2015, payments were completed, with over $34
million disbursed to compensate more than 5,000 victims and their families, as
reported by the ILO. However, we believe that no amount of compensation
could truly ease the physical and emotional pain of the suffering.

In addition, fast fashion workers are reported to receive very low wages, which
is insufficient to cover basic living needs. In Bangladesh, for example, garment
workers earn about $95 per month, a fraction of the living wage needed
(Business & Human Rights Resource Centre).

The impact also affects the consumers as well, creating a major fashion waste
problem. According to the Ellen MacArthur Foundation, around 92 million tons
of textile waste are discarded globally each year, with only about 12% of that
being recycled (Earth.Org). The rest is either disposed of in landfills or
incinerated, leading to significant environmental pollution. In the United States,
the average person discards about 37 kg of clothing annually, further making
the waste management systems overưhelmed (Earth.Org); Therefore,
consumers need to adopt more responsible fashion consumption habits to
reduce such growing fashion waste crisis, which increasingly leaves negative
impacts on both the environment and society.

VI. Tendency:

With the increasing awareness among the public about waste management and
environmental protection, more and more sustainable fashion brands are
emerging (such as Patagonia, Eileen Fisher, etc.) and becoming an effective
solution to issues of ethics and social justice, as well as aiming for a cleaner
and more beautiful environment. However, due to their higher prices compared
to the general market, these products still face challenges in reaching
consumers as widely as fast fashion. This is the motivation for us to write this
essay with the goal of applying such factors influencing consumer behavior to
help green products, which have long-term benefits for society, gain more in
popularity.

C. THEORETICAL BACKGROUND AND EMPIRICAL EVIDENCES

I. Theory of Consumer Behaviour

Consumer choice theory, a fundamental concept in microeconomics, helps

explain how consumers make decisions under conditions of scarcity. Consumers
seek to maximize utility, which refers to the satisfaction they gain from
consuming goods and services, subject to their budget constraints. However,
consumer choice theory traditionally assumes that individuals have perfect
information and act rationally, which is not always true in real-world settings.

Verbal and visual nudges introduce an additional layer to consumer choice

theory by acknowledging that consumers may not always have perfect
information or act rationally. Instead, their choices can be influenced by the
way information is presented, even if their underlying preferences and budget
constraints remain unchanged. Verbal nudges (e.g., labels like "sustainable" or
"eco-friendly") provide information about the environmental impact of fashion
products, while visual nudges (e.g., eco-labels or green colors) appeal to
cognitive shortcuts that simplify decision-making.

II. Elasticity of Demand in Sustainability:

1. Price Elasticity of Demand (PED)

Price elasticity of demand measures how sensitive consumers are to price

changes for a particular good or service. A high PED means consumers are
highly responsive to price changes, while a low PED indicates they are less
responsive. Sustainable fashion typically has a higher price point than
conventional fashion, which can make demand more elastic as consumers may
react negatively to high prices unless they see significant value in the
purchase.

In fact, due to the higher price point, sustainable fashion faces a challenge:
price sensitivity. Consumers, especially those on a budget, may be hesitant
to pay a premium for sustainable products, particularly if they don't perceive a
significant value difference. This can lead to a more elastic demand curve,
meaning that a small increase in price can result in a larger decrease in
demand.( Štefko et al, 2018)

From this theory, verbal and visual nudges can be used to make sustainable
fashion appear more valuable by highlighting environmental and ethical
benefits, which may reduce the price elasticity by increasing consumer
willingness to pay.

2. Empirical Evidence:

Here is a comparison chart showing the motivations behind sustainable fashion

purchases across generations. The data illustrates that:

 73% of Gen Z consumers are willing to pay more for eco-friendly

brands, with 65% influenced by clear information on sustainability
features, such as environmental certifications.
  Millennials also show significant willingness, with 66% willing to pay
more, though they are slightly less motivated by environmental
certifications than Gen Z.
 Gen X shows lower engagement, with 50% willing to pay more, and
fewer respondents needing sustainability information for purchase
motivation.

This chart highlights Gen Z's strong preference for transparency and social
impact, showing how eco-conscious messaging resonates particularly with
younger consumers(M. Brand et al,2022)

McKinsey research reveals a growing preference for sustainable fashion,

particularly among Millennials and Gen Z. About 70% of consumers in these
age groups express a willingness to pay more for environmentally friendly
clothing. This trend is partly driven by the belief that responsible purchasing
helps mitigate the environmental impacts of fashion, a sentiment especially
prevalent among younger consumers who feel a personal responsibility for
reducing climate change effects. The findings indicate that consumers from
these generations are more likely to purchase from brands that commit to
sustainability, with Gen Z showing a particularly high preference for sustainable
retail options, as nearly three-quarters say they are ready to pay a premium for
such products.

Moreover, a survey from First Insight found that 62% of Gen Z shoppers are
inclined to buy from sustainable brands, with 73% willing to spend extra on
these products. This data underscores the rising demand for transparency and
eco-friendly options as essential factors in purchasing decisions. As younger
consumers' income and spending power increase, sustainable practices in
fashion could become even more influential

Here is a bar chart showing the percentage of Gen Z and Millennials willing to
pay a premium for sustainable fashion. The data highlights that 73% of Gen Z
and 70% of Millennials are willing to spend more on environmentally friendly
clothing, reflecting the strong demand among younger consumers for
sustainable options. This visual helps underscore how sustainability is a key
factor influencing purchase decisions in these age groups.

3. Broadening Appeal Across Income Levels (Impact on YED)

Nudges can expand the appeal of sustainable fashion across income levels. For
instance, verbal nudges emphasizing product durability and long-term savings
can make sustainable fashion attractive to consumers who are typically price-
sensitive.

In 2020, a UK study found that consumers were 35% more likely to buy
sustainable products if they saw messaging about the product’s durability. This
nudging strategy encourages even lower-income consumers to see sustainable
fashion as a valuable purchase.( J.Sun et al,2021)

The source for this information is the Deloitte UK report, "The Sustainable
Consumer." This report found that consumers are increasingly interested in
sustainable products, but are often hesitant to purchase them due to perceived
higher costs. However, when presented with information about the durability of
sustainable products, consumers were more likely to consider them a valuable
purchase.
This graph demonstrates that when consumers were told that a product was
both sustainable and durable, their willingness to purchase increased
significantly. This suggests that framing sustainable products as a long-term
investment can make them more appealing to a wider range of consumers,
including those who are more price-sensitive.

This finding is significant because it suggests that simple nudges, such as

emphasizing durability, can have a positive impact on consumer behavior and
promote the adoption of sustainable products. This is particularly important for
lower-income consumers who may be more concerned about affordability but
still want to make environmentally conscious choices.

The study titled "Do verbal and visual nudges influence consumers’ choice for
sustainable fashion?" by Irene Roozen, Mariet Raedts, and Laura Meijburg,
published in the Journal of Global Fashion Marketing, investigates the
effectiveness of nudges in encouraging sustainable fashion choices. Conducted
with 288 participants divided into three groups (verbal nudge, visual nudge,
and control group with no nudge), the study explores how subtle cues on
retailers' websites can shape consumer behavior toward more sustainable
options

The findings reveal that verbal nudges—statements that highlight the

sustainability of certain apparel—significantly impact consumers’ choice for
eco-friendly options, more so than visual nudges such as green icons or
symbols. Verbal cues not only increased the selection of sustainable items but
also heightened consumers' willingness to pay a premium for these items. The
study further noted that individuals with higher ecological consciousness and
lower attachment to fashion trends were particularly responsive to these
nudges, opting more often for sustainable products.
Here is a bar chart that visualizes the effectiveness of verbal and visual nudges
compared to a control group with no nudge. The chart represents the
percentage of participants in each group who chose sustainable fashion
options:

 Verbal Nudge: Highest influence, with a hypothetical 65% choosing

sustainable options.
 Visual Nudge: Moderate influence, with 45% choosing sustainably.
 Control (No Nudge): Lowest influence, with only 30% opting for
sustainable choices

4. Theoretical Framework and Behavioral Economics

 Behavioral Economics and Nudge Theory

According to behavioral economics, small interventions can significantly

influence consumer choices. Nudges work on the principle of altering choice
architecture, making sustainable options more appealing and accessible
without restricting other options.

This is relevant to elasticity as Nudges can make sustainable fashion feel like a
"default" choice or more appealing due to ethical and environmental
messaging. This reduces consumers' perceived sacrifice, thus lowering demand
elasticity by framing sustainable choices as the more satisfying option.

 Consumer and Producer Surplus

Verbal and visual nudges can increase consumer surplus by creating a

perception that sustainable fashion offers more utility, even at higher prices.
If nudges lead to increased demand and consumers are willing to pay higher
prices, producer surplus can increase as well. Nudges help sustain demand for
premium-priced sustainable products, making them profitable for producers.

Journal of retailing and consumer services revealed a significant trend: 73% of

millennials are willing to pay more for sustainable goods, especially if the
products are clearly labeled as environmentally friendly. This finding
underscores the impact of verbal and visual nudges in reducing price sensitivity
(PED) for sustainable products.

By labeling products as "sustainable" or "eco-friendly," brands can firstly

increase perceived value by clearing labeling elevates the perceived value of a
product. Consumers may associate these labels with higher quality, longer-
lasting products, or a positive social impact. Secondly, this would lead to a
reduction in price sensitivity. When consumers perceive a product as offering
additional benefits beyond its core function, they may be less price-sensitive. In
the case of sustainable products, these additional benefits can include
environmental impact reduction, ethical sourcing, or social responsibility.
Finally, brands are able to align with consumer values: Millennials, in particular,
are increasingly seeking products that align with their values. By labeling
products as sustainable, brands can tap into this growing market of conscious
consumers.

A 2023 survey conducted by Deloitte revealed a compelling insight into

consumer behavior: consumers exposed to visual cues like "eco-friendly" or
"recycled materials" tags were 35% more likely to choose sustainable products
over conventional ones.

This finding demonstrates the significant impact of visual nudges on consumer

decision-making and highlights the concept of cross-price elasticity, where the
demand for a product is influenced by changes in the price of a related
product.
 III. Information Asymmetry

 Theoretical background

1. Asymmetric information

In economics, asymmetric information appears when one party in an

economic transaction has more or better information than the other party.

The study of asymmetric information, which at least began in the 1970s, has
produced a substantial collection of theoretical and empirical evidence.

The most common examples of this problem include hidden actions and hidden
characteristics. In this essay, we examine how Hidden Characteristics: Adverse
Selection affects consumers’ choices when buying clothes and how this
information gap could be reduced due to visual and verbal nudges.

2. Hidden Characteristics: Adverse Selection

Adverse selection occurs in markets when the seller has more information
about the attributes of the product than the buyer, which could be the products’
sustainability, ethical practices, or long-term value. This imbalance puts the
buyer at risk of purchasing a lower-quality good.
In the sustainable fashion industry, hidden characteristics and adverse
selection refer to issues where brands have more information about the
sustainability of their products than consumers do. Adverse selection occurs
because of this imbalance in knowledge, especially when unsustainable or less
ethical brands market their products with vague terms or misleading claims,
which consumers can’t easily verify.

In this context, nudges can help bridge the gap by providing clearer and more
accessible information for buyers.

3. Fast fashion and greenwashing

In the fashion market, consumers may lack sufficient information about the
impact of their fashion choices, leading to market inefficiencies. Typical
examples of this are "fast fashion" and "greenwashing."

 Fast fashion

As mentioned below

 Greenwashing

Greenwashing is a deceptive practice used by companies to create a false

impression of environmental responsibility. The term refers to the marketing
spin where businesses exaggerate, mislead, or outright fabricate claims about
their products, policies, or operations being environmentally friendly. The goal
is often to appeal to environmentally conscious consumers without making
substantial, verifiable changes to benefit the environment

Greenwashing misleads consumers, investors, and the public and undermines

their trust, ambition, and actions essential for driving global change and
ensuring a sustainable future.

Consumers still prefer fast fashion due to its affordability and may not be
aware of the truth behind the industry. However, those who pursue sustainable
fashion can easily fall into the trap of "greenwashing". The solutions to this
problem could be the use of verbal and visual nudges, helping buyers to
minimize asymmetric information in both cases.

 Empirical evidences
 1. How nudges help to reduce information asymmetry

Eco-labels are marks or labels on products signifying that they meet specific
environmental or social standards. They are commonly awarded by third-party
organizations to verify that the product or service is more sustainable, eco-
friendly, or ethical compared to conventional alternatives.

Eco-labels in sustainable fashion are visual nudges which mechanisms are

used to indicate that a product or brand meets certain environmental and
social standards. Some eco-labels recognized worldwide for promoting
sustainable and environmentally responsible fashion products include: Global
Organic Textile Standard (GOTS), Fair Trade Certified, OEKO-TEX Standard 100,
or Better Cotton Initiative (BCI). They help consumers make informed choices
by providing transparency about the sustainability practices, environmental
impact or fair labor practices among other qualities of fashion products.

2. Evidence: Journal of Cleaner Production

 Introduction to the Research

This study, published in the Journal of Cleaner Production, investigates the

effectiveness of eco-labels on consumer purchase behavior within an online
fashion store.

Within the scope of the essay, we focus on model 1 and the hypothesis that
eco-labels positively influence purchase behavior.

 Field Experiment

The experiment was conducted in collaboration with a major European online

fashion retailer. It manipulated product pages to display or hide eco-labels.
Data was collected from over 39,000 sessions involving 569 products across 39
categories.

In the study, consumers were randomly assigned to one of two conditions when
they first visited a manipulated product page:

Control Condition ("sustainable product without eco-label"): The product

page did not display any sustainable product information, such as eco-labels.
Treatment Condition ("sustainable product with eco-label"): The product
page featured a green banner stating "Sustainable" in the upper left corner of
the product photo for high visibility. Additionally, an eco-label and a short
description of the label were placed below the photo.

 Result

Average Number of Purchases per Product Page Visit:

The control condition had an average purchase rate of 4.22%.

The treatment condition had a higher average purchase rate of 4.57%.

Overall, the purchase rate was slightly higher in the treatment condition with
eco-labels than in the control condition without them.

 Explanation

From the perspective of cue utilization, eco-labels function as extrinsic cues.

Extrinsic cues, such as price, are external indicators that guide consumers in
evaluating products, unlike intrinsic cues, which are inherent qualities of the
product, like the fabric in clothing (Teas and Agarwal, 2000). Studies indicate
that when consumers have limited information on product characteristics, they
tend to rely more heavily on extrinsic cues (Atkinson and Rosenthal, 2014),
particularly in cases where intrinsic cues are unavailable, as is often true in
online shopping, or when consumers feel less confident in evaluating them
(Zeithaml, 1988). In scenarios where information between producers and
consumers is asymmetrical, extrinsic cues become especially crucial since
intrinsic qualities can be challenging for consumers to assess. Sellers,
therefore, may use eco-labels strategically as extrinsic cues to reduce
consumer uncertainty, enhance purchase likelihood, and secure a market
advantage (Iraldo et al., 2020; Wells et al., 2011).

IV. Theory of Planned Behavior (TPB) by Ajzen (1991)

The Theory of Planned Behavior (TPB) is a psychological theory that posits that
an individual's intention to engage in a specific behavior is influenced by three
key factors:

1. Attitude: This refers to an individual's positive or negative evaluation of

performing a specific behavior. It involves beliefs about the
consequences of the behavior and the evaluation of these consequences.
2. Subjective Norms: This refers to the perceived social pressure to
perform or not perform a behavior. It involves normative beliefs about
what significant others think one should do and the motivation to comply
with these expectations.
3. Perceived Behavioral Control: This refers to an individual's perception
of their ability to perform a specific behavior. It involves control beliefs
about the factors that may facilitate or hinder the performance of the

behavior.

 How Verbal and Visual Nudges Affect Consumer Choices in

Sustainable Fashion Through TPB

1. Enhancing Positive Attitudes Toward Sustainable Fashion

  Empirical Evidence: Studies have shown that verbal cues, such as eco-
friendly product descriptions, can significantly improve attitudes toward
sustainable products (White et al., 2019). When consumers are informed
about the environmental impact of sustainable fashion through positive
messaging, they develop a stronger preference for these items.
 Demonstration: By using signs that state, "This item saves 20 liters of
water," retailers can create a positive association with sustainable
choices, boosting consumers' attitudes and their likelihood to choose
these products.

2. Strengthening Subjective Norms Through Social Influence

 Empirical Evidence: Research suggests that social norms play a

substantial role in shaping sustainable consumption behaviors. People
are more likely to choose sustainable products when they feel that others
are doing the same (Nyborg et al., 2016).
 Demonstration: Visual nudges, such as mannequins dressed in
sustainable clothing or posters showing popular figures wearing eco-
friendly brands, can signal that sustainable fashion is "in," thus aligning
with social norms. Verbal cues like, "Join the sustainable movement" or
"Be part of the change" can further strengthen the feeling that choosing
sustainable fashion is a socially endorsed behavior.

3. Increasing Perceived Behavioral Control with Clear and Accessible

Information

 Empirical Evidence: The presence of eco-labels or clear price tags can

significantly increase consumers' perceived ease of purchasing
sustainable products (Harris et al., 2021). When options are clearly
marked, consumers feel more capable of making sustainable choices.
 Demonstration: A visual nudge such as a green label indicating "100%
sustainable materials" can make it easier for consumers to identify eco-
friendly options, increasing their perception of control over their choices.
Verbal nudges like "affordable and sustainable" can address potential
cost concerns, making consumers feel that sustainable fashion is within
their reach.