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Consumer misbehavior: why people buy illicit goods

Nancy D. Albers-Miller
Assistant Professor of Marketing, College of Business Administration, University of North Texas, Denton, Texas, USA Keywords Consumer behaviour, Consumer marketing, Counterfeiting, Crime, Ethics, Legal matters Abstract Trade in contraband amounts to billions of dollars each year, and yet the buyers of these products are still a mystery. The purpose of this study was to model the decision to purchase illicit goods, using four predictor measures: product type, buying situation, perceived criminal risk, and price. Part-worth conjoint analysis was used to obtain individual weights of main effects and selected interaction effects on the willingness to purchase. Individual respondents evaluated the purchase of illicit goods differently. Cluster analysis was used to segment the respondents. Discriminant analysis was used to assess variable importance. The overall model was shown to be significant. Although the results varied by cluster, the main effects of product type, buying situation and price were all significant predictors of willingness to buy. The interactions of risk with product type and price with product type were also significant predictors for some clusters.

Traffic in illegal goods is big business in the USA. Counterfeiting, shoplifting, illegal drug trade and other illicit consuming behavior costs Americans billions of dollars annually (Budden and Griffin, 1996; Bush et al., 1989; Kallis et al., 1986). Counterfeit production reportedly amounts to 4 percent to 8 percent of US GNP (Slater, 1985) and is increasing (Harvey, 1987). Controlling source of contraband Although this problem might appear to be a topic more appropriately studied by criminologists and legal scholars, a closer look reveals that work in this area has been largely one-sided. The supply side has garnered most of the research. Clearly, legal scholars and law enforcement officials have addressed the issues of controlling the source and flow of contraband. Researchers of criminal psychiatry and sociology of deviant behavior have examined personal and social aspects leading to general criminal and deviant behavior. The behavior of interest to these scholars has also been supply-side oriented. For example, they have tried to develop an understanding of why people steal, not why people buy stolen goods. Even marketing researchers have focused on issues relating to control of supply (Bush et al., 1989; Globerman, 1988; Harvey, 1987, 1988; Harvey and Ronkainen, 1985; Olsen and Granzin, 1992). Yet, economic theory would suggest that if there is little or no demand for a product, supply will decrease as well. The demand side of this problem is clearly an issue of consumer behavior, or perhaps more appropriately termed consumer misbehavior. Despite the fact that such behavior is potentially harmful to businesses (Globerman, 1988; Harvey and Ronkainen, 1985; Olsen and Granzin, 1992), the consumer (Dillon, 1989; Harvey, 1988; Pinkerton, 1990) and society as a whole (Stotland, 1977), little marketing academic interest has been generated until recently. In 1991, Hirschman called for further research into the ``dark side of consumer behavior''. Perhaps in response to this call, during the past few years, marketing scholars have begun to explore in greater depth issues of consumer misdeeds. Unfortunately, few pieces of research have been published in this entire topic area. Of that, only a small portion of this research has addressed determinants of illicit consumer behavior.
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Illicit goods are illegal goods

For the purpose of this study, illicit goods are illegal goods, freely chosen by the consumer. An illicit purchase would be one where the product sold and purchased was offered illegally being either illegally produced (counterfeit) or illegally obtained (stolen). Additionally, these are purchases where the buyer can freely accept or reject the product offered; there is no physical or psychological need for the product. Specifically excluded from this study are products that create dependency, products passed unsuspectingly to an uninformed consumer or products that might offer a ``last chance'' to a terminally ill patient. Literature review General, inappropriate consumer behavior has been explored by marketing scholars. Budden and Griffin (1996) prepared a special issue of Psychology and Marketing dedicated to the study of aberrant and dysfunctional consumer behavior. In this area, the most commonly studied issues have concentrated on compulsive buying behavior, addictive consuming behavior, consumer fraud and shoplifting. Much of the research has focused on compulsive consumption. Faber and O'Guinn (1988) were some of the earliest researchers to study compulsive consumers. They reported that compulsive consumers are systematically different from other consumers in some ways, such as being more materialistic, but did not differ in others, such as possessiveness. Valence et al. (1996) developed a scale to measure compulsive buying behavior. Faber and Christenson (1996) described the mood state of compulsive consumers. Hassey and Smith (1996) defined the scope of compulsive consumption. Rindfleisch et al. (1997) examined the influence of family structure on compulsive consumption. Roberts and Martinez (1997) reported on compulsive buying in Mexico. Elliot et al. (1996) discussed issues related to consumers addicted to consumption. Another area of aberrant behavior studied by consumer behavioralists has been consumption of addictive substances. Hirschman (1992) provided a review of consumer behavior, medicine, sociology, psychiatry and psychology to develop a framework of addiction. Bearden et al. (1994) studied underage consumption of alcohol and illegal drug use among high school and college students. Powers and Anglin (1996) examined couples engaged in addictive drug use.

Consumer behavior literature

Consumer fraud has also been examined in the consumer behavior literature. Cole (1989) used deterrence theory to examine fraudulent consumer behavior. Strutton et al. (1994) reported on the methods that consumers use to rationalize fraudulent behavior. Shoplifting is another illegal consuming behavior which has been examined (Cox et al., 1990). Kallis et al. (1986) researched the image of the shoplifter. Babin and Babin (1996) reported on emotional influences on shoplifting. Recently, some scholars have examined the problem of counterfeiting from the consumer's perspective. Bloch et al. (1993) reported on the consumer's role in the growth of trademark piracy. Wee et al. (1995) studied variables, other than price, such as age, income and product attributes, that influence the purchase of counterfeits. Both Cordell et al. (1996) and Wee et al. (1995) have researched the attitudes of the consumer. Several recurring concepts have been discussed both in this literature and in the research of general criminal behavior. The aberrant and/or criminal behavior, both consuming and other, is often motivated or abetted by certain

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characteristics or situational factors. Price, penalty and situation-specific elements all appear to be related to the decision to willingly participate in criminal behavior. Price the main motive Not surprisingly, price pressures have been associated with illicit behavior (Dillon, 1989). In all purchases, consumers balance monetary outlays against perceived benefits (O'Shaughnessy, 1987). Dodge et al. (1996) reported that direct economic consequences influence the tolerance of questionable behavior by consumers. Wee et al. (1995) suggested that price is the main motive for the purchase of counterfeit goods. Bloch et al. (1993) indicated that a consumer will select a counterfeit good over a genuine product offering if there is a price advantage. Stolen and counterfeit goods represent a cost/benefit advantage to the consumer. Stolen goods represent quality products and extreme cost savings. Counterfeits represent a prestigious (Grossman and Shapiro, 1988), albeit inferior product (Ehrlich, 1986), at a good price. While price advantages serve to motivate the consumer to engage in aberrant behavior, fear of criminal penalty should deter such behavior. Grasmick and Bryjak (1981) found an inverse relationship between perceived severity of punishment and criminal conduct. Hollinger and Clark (1983) discussed a negative association between the perceived chance of being caught and criminal behavior. Conversely, when there is a lack of fear of punishment, people do engage in inappropriate behavior. The lower the risk of detection, the more likely a person is to deviate (Feldman, 1977; Hayner, 1929). Some consumer researchers have supported this notion. O'Shaughnessy (1987) reported that a consumer's choice might be constrained by fear of sanctions. Cole (1989) found a negative relationship between the perceived probability of getting caught and consumer fraud. Pitts et al. (1991) discovered a relationship between unethical behavior and personal consequences. Satisfaction from deviant acts But fear of criminal punishment does not always serve as a deterrent to crime. There are people who get satisfaction out of the performance of deviant acts and who want to rebel against the system (Walker, 1977). Cordell et al. (1996) studied the relationship between lawfulness attitudes and counterfeit purchase intentions. Finally, situational elements may affect illicit behavior. Specifically, situational influences affect the decision to engage in unethical consuming behavior (Rindfleisch et al., 1997; Whalen et al., 1991). Social pressure can lead people to follow rules as well as to break rules (Walker, 1977). There are two potential situations: the behavior occurs while the person is alone and is free from direct social pressure or the person is not alone and is subjected to direct social pressure. The direct social pressure to conform being either to join others who are engaging in the illicit behavior or to avoid the illicit behavior because the others present are not participating. Previous research has examined these possibilities. First, consider the situation where the person is alone. Hayner (1929) found that when a person is alone, and released from the restraints offered by intimate circles, that person is more likely to act in accordance with impulses than by ideals and standards of a group. Gellerman (1986) reported that people are more likely to engage in misconduct when they think the act will not be found out and publicized.
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In addition to the situation providing an opportunity to avoid detection, the situation may encourage criminal behavior. A person with friends exhibiting deviant behavior is more likely to exhibit deviant behavior (Conger, 1980). Barker (1977) discovered that peer group support could create a social situation in which certain corrupt acts are tolerated and accepted. Peer pressure to conform has been reported as a factor leading to inappropriate consuming behavior (Bearden et al., 1994; Kallis et al., 1986; Powers and Anglin, 1996). While peer support of the behavior encourages participation, peer rejection of the behavior serves as a deterrent. Social controls may be an even better deterrent to crime than physical controls (Hollinger and Clark, 1983). Individuals will attempt to avoid exposure if they engage in behavior that is not supported by their peers (Downes and Rock, 1982). Resort to dishonesty when faced with temptation Finally, the decision to participate is complicated by the ability of the participant to rationalize the behavior (Strutton et al., 1997; Strutton et al., 1994). Feldman (1977) suggested that with the right combination of rewards and cost, transgressions might be committed by virtually anyone. This concept is echoed by Cox et al. (1990) who reported that basically honest people resort to dishonesty when faced with temptation, a perceived low risk of apprehension and punishment, and the ability to rationalize the behavior. One way that people rationalize their behavior is by concluding that it is not ``really'' illegal or immoral (Gellerman, 1986). Society reinforces these rationalizations because members of society are surprised by some law breaking and not by others (Walker, 1977). Hypotheses Drawing on the previous research, this study attempts to develop a model of illicit consumption behavior. This study proposes that the decision to purchase an illicit product, instead of a legitimately offered product, can be explained by a combination of variables drawn from the study of criminal behavior and buyer behavior. The behavior is predictable based on three variables: (1) (2) (3) the selling price; the situation under which the purchase takes place; and the risk associated with the purchase.

The model is further complicated by the interaction of the product offered. A significant F-statistics, for the models estimated on the individual level, will indicate that, overall, the variables predict a willingness to buy illicit goods. Given a significant model, several hypotheses can be examined. The first of these is the obvious economic hypothesis regarding price. H1: Willingness to buy is negatively associated with selling price. Significance of the price coefficient will support this hypothesis. It is expected, however, that the importance of price will not be the same for counterfeit and stolen goods. Because counterfeit goods are typically of lower quality than goods produced by the brand name manufacturer, price should be a more important variable in the consideration to purchase a counterfeit good. H1a: Price will provide a higher degree of influence in the decision to purchase counterfeit goods, compared to stolen goods.
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This hypothesis will be supported if the mean interaction weight for price and counterfeit is significant and greater than the mean interaction weight for price and stolen. Social pressures The social pressures exerted on the actual buying situation are also expected to affect willingness to buy. The perceived support or lack of support by others will affect the decision to participate in a criminal activity. Several hypotheses follow from this train of thought. The literature suggests that people are likely to give in to social pressure when others are participating also; hence: H2: A buyer is most willing to buy an illicit good when others present are buying illicit goods. Significant negative weights for the variables representing the two alternative buying situations will provide support for this hypothesis. Considering this a base level, two additional hypotheses, based on two other buying settings, are suggested. When a buyer is alone, they are no longer under the social pressure to participate in the activity; hence: H2a: A buyer is less willing to buy an illicit good when they are alone, than when others are present and buying the illicit product. A significant negative coefficient for the dummy variable representing the ``alone'' buying situation will provide support for this hypothesis. A buyer, however, will not want people who might not support a decision to buy illicit goods to know about the purchase; therefore, the situation where the buyer is alone, should be preferred to a setting where people are present, but not buying. This logic suggests that a buyer will want to avoid a situation where their behavior is outside of the group norm; hence: H2b: A buyer is least willing to buy an illicit good when others are present and not buying the illicit product. A significant negative coefficient for the dummy variable representing the ``friend present, but not making a purchase'' buying situation will provide support for this hypothesis. Conflicting evidence The literature suggests conflicting evidence regarding perceived criminal risk. Although evidence suggests that criminal risk is a deterrent to crime, the literature also suggests that people will participate in deviant acts if they can rationalize that the act really is not bad. While it is expected that the greater the level of perceived criminal risk, the less likely a person is to engage in illicit behavior, the ability to rationalize the behavior will moderate the effect. H3: Willingness to buy illicit goods is negatively associated with the level of perceived criminal risk. Significance of the perceived criminal risk coefficient will support this hypothesis. However, the importance of perceived criminal risk is not expected to be the same for both counterfeit and stolen goods. Because counterfeit goods are likely to be explained away as not ``really illegal'' more easily than stolen goods, perceived criminal risk should be a more important variable in the consideration to purchase a stolen good. H3a: Perceived criminal risk will provide a higher degree of influence in the decision to purchase stolen goods, compared to counterfeit goods.
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This hypothesis will be supported if a significant mean interaction weight for perceived criminal risk and stolen is greater than the mean interaction weight for perceived criminal risk and counterfeit. Method Sample and procedure The respondents for this study were night graduate students at a large southwestern university taking core MBA classes. The majority of these students were currently employed in jobs they considered to be their careers. They were invited to participate in the study during class and 153 students agreed to participate by signing a consent form. Participants were given a SASE and a copy of the survey instrument to be completed at their convenience at another time outside of class. A total of 92 surveys were returned for a response rate of 60.1 percent. One response was unusable because a large portion of the profiles were not evaluated. This survey was not used for data analysis. This method of data collection was selected to assure the anonymity of the respondent. Krohn et al. (1974) reported that self-report data may be affected by the method of data collection and that a questionnaire may be preferable if anonymity can be assured. Policy-capturing format Survey instrument The data were collected and analyzed using part-worth conjoint analysis. A survey was structured in a policy-capturing format. Policy capturing techniques have been designed to provide a method for revealing basic structures and characteristics of individuals' judgmental structures with an indirect method of attitude measurement (Madden, 1981). Rather than require the respondents to rank order the profiles, a Likert-type scale, which has been found to be more powerful than rank ordering (Madden, 1975), was used for analyzing judgments. The data were collected with a survey instrument that provided a judgmental situation, in this case a willingness to buy, influenced by a number of informational cues. Self-report data have been frequently used by criminologists and sociologists to collect data on criminal and delinquent behavior. Use of self-report data is one of the most popular methods of measuring delinquent behavior (Farrington, 1973). The seriousness of the acts themselves has not altered the use of self-report data. Criminology concerns on theft (Ruggiero et al., 1982), shoplifting (Klemke, 1978), aggression and violence (Steadman and Felson, 1985), cheating (LaBeff et al., 1990), drug use (Keane et al., 1989) and rape (Tieger, 1981) have all been examined using self-report data. Akers et al. (1983) found self-report questionnaire data collection to be valid for examining deviant behavior. Self-report data, used under these conditions, have been shown to have predictive validity, internal consistency and concurrent validity (Farrington, 1973). The judgment situation for this study was developed after several pilot studies. The respondent was asked to evaluate several combinations of differing levels of cues. The product category of color televisions was selected because of the range in television prices, the perceived range of product quality among televisions and the highly visible nature of the product. Pilot study respondents reported a perceived difference in quality among televisions legitimately offered for sale over the chosen price range of $150 to $600. Sony was selected as a recognized brand name that has a perceived level of high quality. Generic goods, unbranded, were included for
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a basis of comparison. Pilot study respondents agreed that it was reasonable to assume that stolen, counterfeit and unbranded televisions were available for sale. Replication of full factorial design The questionnaire was created using decision analysis system (DAS) software. The design was a fractional replication of a full factorial design. The design was developed to test all main effects, and selected first-order interaction effects. This software has been designed specifically to develop and analyze personal subjective judgmental choice in probabilistic environments. Individuals responded to 27 actual profiles, six practice profiles and ten repeated profiles, for a total of 43. Variable measures The dependent variable was a measurement of the respondent's willingness to buy a described product under a given profile. The variable was measured with a Likert-type, seven-point scale, ranging from not at all willing (1) to extremely willing (7). The independent variables included measures of product type, buying situation, perceived criminal risk and product price. Three product types were used in the study, generic, counterfeit and stolen. Three buying settings were considered: ``You are alone while making the purchase'', ``A friend is with you, but is not making a purchase'', and ``A friend is with you who is purchasing a (product type) TV''. The product type described in the profile was entered in this statement. Three levels of perceived criminal risk were alternated in the conjoint profiles. The lowest level of risk was described as ``The DA is not prosecuting illegal purchases''. The mid-level risk was described as ``The DA is occasionally prosecuting illegal purchases''. The highest level of risk was described as ``The DA is heavily and consistently prosecuting illegal purchases''. These statements were assumed to be levels of a single variable. Three price levels were alternated in the profiles. The prices given were $150, $300, and $450. The Sony TV, described in the scenario as the desired branded good, was priced at $600. The actual price values were used in the analysis. The interactions between the two illicit product types with price and perceived criminal risk were also evaluated as hypothesized. Regression analysis used Data analysis The part-worth conjoint profiles were analyzed using regression analysis. A regression model, without an intercept, was estimated for each of the 91 respondents. The individual regression models provided the part-worth utilities for each individual respondent. A measurement of judgment consistency was based on the similarity of judgments across ten repeated profiles. Consistency was computed by correlating judgments from repeated profiles with the judgments on original profiles. This correlation was multiplied by ten to provide a consistency index ranging from 1 to 10. The individual consistency indices ranged from a low of 5.1 to the maximum of 10.0. The average consistency index was 8.965 with a standard deviation of 1.34, suggesting the respondents carefully analyzed the profiles and did not randomly mark answers. Results The 91 individual regression models were used to establish the significance of the overall model. Ten respondents had no variation on their responses. These individuals indicated that they would be unwilling to buy under any of
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the profiles described. These ten responses were considered a separate cluster. Additionally, four respondents based their willingness to buy only on the basis of product type. These respondents were also considered a separate cluster. These 14 responses were not subjected to additional data analysis. Of the remaining models, all but one was significant at the 0.0001 alpha level. The F-statistics support the overall model, indicating that the decision to purchase an illicit good, instead of a legitimately offered product, can be explained by the model's variables. Majority fallacy Given a significant model, the independent variables were examined more closely. Preference ratings, pooled across all respondents, were very similar, with generic, counterfeit and stolen receiving 5.71, 4.16 and 4.04, respectively. This suggested the possibility of ``majority fallacy''. Majority fallacy occurs when there is heterogeneity of preferences (Moore, 1980). Segmented models were used to avoid this problem. The segmented models were developed using Ward's cluster analysis. Using an eigenvalue of 1.00 as a cut-off, the results strongly suggested the presence of three clusters. There was a drastic change in eigenvalues between the three (2.878) and four (0.544) cluster solution. The clusters have memberships of 33, 24 and 21, reinforcing the validity of the clusters since Ward's is biased to equal sized clusters. The three cluster solution was validated using non-hierarchical k-means clustering. The solution was limited to a maximum of three clusters. The k-means cluster membership was identical to Ward's membership for 88.3 percent of the cases, again validating Ward's cluster solution. The three clusters of respondents were used to test the remaining hypotheses. The three clusters appeared to yield significantly different decision criteria. The aggregated levels of regression weights for each of the three clusters appears in Table I. Respondents in Cluster 1 were more willing to purchase generic, than counterfeit, and counterfeit was preferred to stolen. The respondents from Cluster 2, however, weighted stolen more favorably than either generic or counterfeit. Finally, members of Cluster 3 considered generic and counterfeit essentially equally preferable to stolen. In addition to product type, buying setting appears to be disproportionately important among the clusters. Members of Cluster 3 put greater weight on ``A friend is with you, but is not making a purchase'' and ``You are alone while making the purchase'' than either Cluster 1 or Cluster 2 respondents. Mean weights for perceived levels of criminal risk were different across the clusters as well, as were the weights for price. These differences do not, however, mean that these variables are significant predictors.
Variable Generic good Counterfeit good Stolen good Friend present but not buying Alone when buying Level of criminal risk Product price Level of criminal risk6counterfeit Level of criminal risk6stolen Product price6counterfeit Product price6stolen 1 6.1828 3.0405 1.4433 0.0035 0.0243 0.1875 0.0069 0.0365 0.1302 0.0044 0.0064 Cluster 2 3.0030 2.7438 6.3364 0.0972 0.0232 0.1181 0.0020 0.0556 0.8264 0.0005 0.0023 3 8.0706 7.4991 5.3986 0.3968 0.2434 0.3571 0.0096 0.3571 0.3016 0.0023 0.0056

Table I. Regression weights by cluster


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Results validated by reclassification

A discriminant analysis was performed to determine the significance of the variables. The discriminant model was significant at the 0.0001 level. The results were validated by reclassification. Reclassification resulted in only two misclassified respondents, or a 2.63 percent error rate. The discriminant results indicated that most of the variables are significant predictors. The results appear in Table II. The three product types, generic, counterfeit and stolen, were all significant at the 0.001 level. The two types of buying situations were also significant, ``A friend is with you, but is not making a purchase'', at the 0.001 level and ``You are alone while making the purchase'', at 0.10. The main effect of perceived level of criminal risk was not significant, however, both the interactions between counterfeit and risk and stolen and risk were significant at 0.01. The main effect of price, as well as both interactions between counterfeit and price and stolen and price, were significant at the 0.01 level. H1, that willingness to buy is negatively associated with selling price of the good offered for sale, was supported by the significant discriminant coefficient for price. The significant interactions of price with counterfeit and price with stolen partially supported H1a, that price will provide a higher degree of influence in the decision to purchase counterfeit goods, compared to stolen goods. For this to be fully supported, the two mean interaction weights would need to be significantly different. A t-statistic was used to test this hypothesis on a cluster-by-cluster basis. The results were mixed. The resulting t-statistics for clusters one, two and three were 1.49 (31 df), 2.39 (23 df) and 2.36 (20 df), respectively. These results were not significant for Cluster 1. They were significant at the 0.05 level for Clusters 2 and 3, however, the results were counter to the hypothesized direction for Cluster 2. The mixed results are not all that surprising, considering the decision criterion differences between groups. The lack of significance for Cluster 1 appears to result from the strong preference for generic goods over either counterfeit or stolen. The reversed sign for Cluster 2 appears to be a result of the preference for stolen goods over counterfeit and generic. Finally, the supported hypothesis by Cluster 3 makes sense in light of the preference for counterfeit or generic goods over stolen. H2, that a buyer is most willing to buy an illicit good when others are buying also, was supported by the significant discriminant coefficient and negative weights for the two dummy variables representing the two alternative buying situations, ``A friend is with you, but is not making a purchase'', and ``You
Variable Generic good Counterfeit good Stolen good Friend present but not buying Alone when buying Level of criminal risk Product price Level of criminal risk6counterfeit Level of criminal risk6stolen Product price 6 counterfeit Product price 6 stolen Note: *significant at 0.01;
**

R2 0.60 0.58 0.50 0.26 0.07 0.05 0.34 0.12 0.28 0.11 0.43

F 54.55 50.01 37.37 13.18 2.61 1.79 18.66 4.96 14.42 4.63 28.12
* * * * **

N/S
* * * * *

significant at 0.10

Table II. F-statistics for discriminant analysis


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are alone while making the purchase''. H2a, that a buyer is less willing to buy illicit goods when they are alone, and therefore are less likely to face social pressure to deviate was supported by the negative weight and significant discriminant coefficient for the variable ``You are alone while making the purchase''. H2b, that a buyer is least willing to buy an illicit good when others are present and not buying, would be supported by a significant difference between the ``You are alone while making the purchase'' variable and ``A friend is with you, but is not making a purchase'' variable mean weight. Again, these must be computed on a cluster-by-cluster basis. Results not significant The resulting t-statistics for Clusters 1, 2 and 3 were 0.42 (31 df), 0.51 (23 df) and 1.86 (20 df), respectively. These results were not significant for any of the clusters. These results suggest that while both alternative buying situations were significantly different from the base level, of a friend buying also, they were not significantly different from each other. Again, this result is not surprising. Criminology theory suggests that deviance is strongly influenced by peer pressure, which these results support. H3, that willingness to buy illicit goods is negatively associated with the level of perceived criminal risk, was not supported. This also is not completely surprising in light of the significant interactions. The significant interactions of risk with counterfeit and risk with stolen partially support H3a, that perceived criminal risk will provide a higher degree of influence in the decision to purchase stolen goods, compared to counterfeit goods. For this to be fully supported, the two mean interaction weights would need to be significantly different. A t-statistic can be used to test this hypothesis on a cluster-by-cluster basis. Mixed results These results were mixed also. The resulting t statistics for Clusters 1, 2 and 3 were 0.88 (31 df), 4.15 (23 df) and 0.26 (20 df), respectively. These results were not significant for Clusters 1 and 3. They were significant at the 0.001 level for Cluster 2. Again, the mixed results are not all that surprising, considering the decision criterion differences between groups. The lack of significance for Clusters 1 and 3 appears to result from the strong preference for generic or counterfeit instead of stolen. The supported hypothesis by Cluster 2 makes sense in light of the preference for stolen over either counterfeit or generic goods. The significant discriminant coefficient suggests that the interactions are significant, but not always significantly different from one another. Table III provides a summary of the supported hypotheses. Conclusions The objective of this study was to evaluate the variables which are most important in the decision to purchase illicit goods. To model this phenomenon, four predictor measures were used. These measures included: (1) (2) (3) (4) product type; buying situation; perceived criminal risk; and price.

Part-worth conjoint analysis was used to obtain individual weights of these variables on the willingness to purchase. These weights were aggregated into three clusters using Ward's method. The importance of these variables was established using discriminant analysis.
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1 Model H1 Willingness to buy is negatively associated with selling price H1a Price will provide a higher degree of influence in the decision to purchase counterfeit goods, compared with stolen goods H2 A buyer is most willing to buy illicit goods when others are present and buying illlicit goods H2a A buyer is less willing to buy illicit goods when they are alone, than when others are present and buying the illicit product H2b A buyer is least willing to buy illicit goods when others are present and not buying the illlicit product H3 Willingness to buy illicit goods is negatively associated with the level of perceived criminal risk H3a Perceived criminal risk will provide a higher degree of influence in the decision to purchase stolen goods, compared with counterfeit goods Significant Supported Not supported

Cluster 2 Significant Supported Not * supported

3 Significant Supported Supported

Supported

Supported

Supported

Supported

Supported

Supported

Not supported Not supported Not supported

Not supported Not supported Supported

Not supported Not supported Not supported

Note: *H1a was significant in the direction opposite hypothesis

Table III. Supported hypotheses

The overall model was shown to be significant. The main effects of product type, buying situation and price were all significant predictors of willingness to buy. The interactions of risk with product type and price with product type were also significant predictors. Peer pressure All the respondents were most likely to engage in illicit behavior if there was peer pressure to do so. They were less likely to purchase an illicit good if they were alone or with someone who was not engaging in the illegal behavior. In regard to the other variables, the data suggest that the members of the three clusters evaluated the purchase of illicit goods differently. The respondents in Cluster 1, representing 42.3 percent of the respondents, indicated that they would prefer a generic good, but would consider a counterfeit. Members of this group did not consider stolen goods to be a viable alternative. These respondents were discouraged from participating in illicit trade by the degree of perceived criminal risk. They were more concerned about the risk associated with stolen goods, but were also concerned about the risk associated with counterfeit goods. These respondents considered price to be an equally important issue in the consideration of all three product types.
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Discouraged by perceived risk

Members of Cluster 2, 30.8 percent of the respondents, preferred the stolen products more than two-to-one over either counterfeit or generic. Statistically, they treated counterfeit and generic goods similarly. These respondents were inclined to reject both generic and counterfeit goods regardless of risk. They were, however, strongly discouraged from an illicit stolen purchase, when there was a perceived risk associated with that purchase. These respondents were more likely to reject the stolen good as price increased. Lowering the price on the counterfeit good did not make it more appealing to this group. Finally, members of Cluster 3, 26.9 percent, would consider purchasing all three products. While they would consider stolen goods, they favored generic or counterfeit goods. This group reacted the most strongly to level of perceived risk. The risk associated with both counterfeit and stolen goods was equally concerning to this group. Lowering the price on both the stolen good and the counterfeit good made the product more appealing, but this reaction was strongest for the counterfeit offering. The results leave several questions unanswered, most obviously what drives the differences between the clusters. Future research should address that issues as well as addressing some of this study's limitations. Although the literature suggests that social class is not a significant predictor of deviancy, and therefore the study should not have been adversely affected by use of a MBA student population (Krohn et al., 1980; Tittle and Villemez, 1977), future research should include more varied populations. Managerial implications and applications The results suggest some interesting conclusions for public policy and businesses. Even a relatively homogeneous group of respondents, employed MBA students, view the decision scenarios quite differently. Different individuals will respond to different stimuli from business and policy makers.

Willing to purchase stolen products

Some respondents appeared to be able to rationalize the illicit purchase decision. Some of the respondents treated counterfeit and generic goods indiscriminately. Others were strongly willing to purchase stolen products. People not inclined to engage in illicit behavior were discouraged by the level of perceived risk. People inclined to engage in illicit behavior were less inclined as fear of criminal reprisals increased for the particular type of illicit behavior they considered. Because illicit trade is harmful to legitimate business, managers should consider lobbying for the strict enforcement of criminal sanctions against consumers, as well as merchants of illicit goods.
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