<p>Environmental sustainability is a shared responsibility in product and service markets: firms must make genuine efforts to reduce their environmental impact, and consumers must choose products that reflect their values. However, as the United Nations warns, greenwashing remains a major barrier to climate progress because it undermines public trust and distorts market incentives. To rigorously analyse this phenomenon, we model the strategic interactions between firms and consumers as a two-player asymmetric evolutionary game with continuous strategy sets and nonlinear payoffs. This setup captures realistic trade-offs and allows sustainability effort and consumer commitment to vary in degree rather than being treated as all-or-nothing decisions. We compute the strict Nash equilibria and derive sufficient conditions for the stability and instability of diverse outcomes. These include full disengagement, where neither firms nor consumers invest in sustainability; an interior outcome, where both choose moderate levels of effort; and boundary outcomes, where one side fully commits while the other remains only partially engaged. In particular, we apply the static concept of the Continuously Stable Strategy (CSS) to analyze the stability of partial cooperation, and Strong Uninvadability (SUP) to determine the conditions under which full sustainability, characterized by maximal genuine effort from firms and fully eco-conscious consumer behavior, becomes a robust outcome of the evolutionary dynamics. We also interpret these conditions economically, identifying the critical market thresholds required to break the greenwashing cycle.</p>

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Breaking the Greenwashing Cycle: An Asymmetric Evolutionary Game with Continuous Strategy Sets

  • Krupa Maria Jose,
  • Rajani Singh

摘要

Environmental sustainability is a shared responsibility in product and service markets: firms must make genuine efforts to reduce their environmental impact, and consumers must choose products that reflect their values. However, as the United Nations warns, greenwashing remains a major barrier to climate progress because it undermines public trust and distorts market incentives. To rigorously analyse this phenomenon, we model the strategic interactions between firms and consumers as a two-player asymmetric evolutionary game with continuous strategy sets and nonlinear payoffs. This setup captures realistic trade-offs and allows sustainability effort and consumer commitment to vary in degree rather than being treated as all-or-nothing decisions. We compute the strict Nash equilibria and derive sufficient conditions for the stability and instability of diverse outcomes. These include full disengagement, where neither firms nor consumers invest in sustainability; an interior outcome, where both choose moderate levels of effort; and boundary outcomes, where one side fully commits while the other remains only partially engaged. In particular, we apply the static concept of the Continuously Stable Strategy (CSS) to analyze the stability of partial cooperation, and Strong Uninvadability (SUP) to determine the conditions under which full sustainability, characterized by maximal genuine effort from firms and fully eco-conscious consumer behavior, becomes a robust outcome of the evolutionary dynamics. We also interpret these conditions economically, identifying the critical market thresholds required to break the greenwashing cycle.