skip to content

Keynes Fund


Summary of Project Plan

The central assumption of economic theory is that consumers make rational choices when purchasing goods.

However, the presence of market failures such as imperfect information, biases, search costs, etc. can lead to sub-optimal decisions. This inefficiency is particularly evident in food markets where policymakers often try regulatory interventions and initiatives to inform consumers about their food choices. Influencing the dietary patterns of consumers towards making sustainable, healthy choices is critical as it has microscale outcomes (e.g., improving the health of individuals and reducing the incidence of chronic diseases) with macroscale implications (e.g., encouraging sustainable food production to mitigate climate change). On the supply-side, in the presence of imperfect information about consumer preferences (and how they evolve with time), food producers and firms find it difficult to optimise the products to match the demand. This often leads to socially sub-optimal products in marketplaces with inefficient market outcomes (and demand and supply equilibria) in the food sector.

While policymakers have an important role in improving the efficiency of markets through regulation, their intervention can be very slow as consumer behaviour, especially in food markets, is very sticky. Behavioural science promises a different approach to this issue. It suggests exploitation of the causes behind market failures to nudge individuals in the direction of making better choices. However, as seen from a few small-scale experiments that have been carried out in controlled and simulated environments, getting the nudging strategy correct is difficult and can sometimes backfire. The problem becomes even worse when the participants in the studies are not actual consumers.

Our thesis is that sometimes firms are in a better position to influence consumer decision-making compared to policymakers. However, such examples are rare, and more often market failures force both firms and consumers to sit at inefficient equilibria.

We have partnered with one of the UK’s leading companies that are operating within the online food delivery space to assemble a household-level dataset of UK customers. In this project, we are studying the inefficiencies in the food market space and estimating the consumer preferences for food choices using structural models. We aim to design and evaluate firm-administered strategies that are efficient in nudging consumers toward making healthier choices. As the general trend in food purchases is shifting towards online platforms, this will be one of the first empirical studies to solely focus on studying the online food purchase behaviour of consumers rather than relying on modeling their food consumption habits through scanner datasets as has typically been done in the literature.

Our proposed work is strongly aligned with the Keynes Fund research objectives as we will be investigating market failures and inefficiencies in the public health domain, and how to use a marketbased approach to correct for these by aligning incentives for both firms and consumers.



Prof. Ahmed Khwaja


Ahmed Khwaja is Professor of Marketing, Business & Public Enterprise at the Judge Business School, University of Cambridge. His research interest are primarily in marketing strategy and quantitative marketing, including: health care markets; innovation and market entry; customer and employee relationship management; pharmaceutical R&D, retail chain expansion and growth; and social enterprises in emerging markets.


Sonal Srivastava


Sonal Srivastava is a PhD Candidate at the Judge Business School, University of Cambridge. Her research interests are in Marketing.


Share this Project