Revisiting Reputational Damage: Focusing on Consumers' “Safer Side” Selection

Abstract

Reputational damage, or indirect economic damage incited by rumors, is a notable feature of the disaster at Fukushima #1 nuclear power station. Reputational damage is increasingly recognized as a vital part of health-threatening incidents, and is ever evolving through growing information networks. The Tokyo Electric Power Company (TEPCO), under the guidance of the government, decided to embrace reputational damage in its compensation to the agriculture, services, tourism and manufacturing sectors. The reputational damage is estimated to total up to ¥1.8 trillion, marking it as one of the top compensation categories. Although widely identified as irrational consumer behavior, some reputational damage may result from rational one based on the “safer side” selection. Rather than trying to debunk rumors once they have spread, it may be effective to prevent additional expansion by a coordinated scheme among consumers, producers and the companies/entities which caused the fear.