Cognitive and Affective Consequences of Mandatory AI Disclosure in Luxury Advertising: How Perceived Effort and Moral Disgust Produce Asymmetric Effects on Brand Authenticity and Willingness to Pay

The EU AI Act's mandatory transparency obligations require brands deploying Generative Artificial Intelligence (GenAI) in advertising to disclose AI involvement explicitly, creating a tension with the luxury sector's dependence on human craftsmanship, exclusivity, and brand authenticity. Prior research has examined AI disclosure effects under voluntary conditions in mainstream and hospitality contexts; the consequences of mandatory disclosure within luxury advertising remain empirically unexamined. The present study addresses this gap through a Stimulus-Organism-Response (S-O-R) framework, proposing that mandatory AI disclosure activates two parallel internal mechanisms, a cognitive evaluation of reduced Perceived Effort and an affective response of Moral Disgust, which produce asymmetric consequences for Brand Authenticity and Willingness to Pay (WTP). Consumers' Need for Uniqueness is theorized as a boundary condition moderating the disclosure effect on both mediators. A single-factor between-subjects experiment (N = 145) exposed Italian consumers to a photorealistic advertisement for the fictitious luxury brand MERIDIAN, randomly assigned to an AI-generated or human photography disclosure condition and analyzed using PLS-SEM. Results confirm that mandatory AI disclosure significantly reduces Brand Authenticity through Perceived Effort as a complementary mediator, whereas the economic penalty on WTP operates exclusively through an indirect-only mediating route. Moral Disgust produces a direct effect on Brand Authenticity but does not extend to WTP, establishing an asymmetric dual-pathway structure. Need for Uniqueness moderation is not supported across any of the four hypothesized pathways. These findings extend dual-pathway consumer response theory to mandatory regulatory disclosure contexts, with direct implications for luxury brand managers navigating GenAI adoption under the EU AI Act.