Experimental Auctions with Exogenous and Endogenous Information Treatment: Willingness to Pay for Improved Parboiled Rice in Benin

The impact of information as an extrinsic quality cue on consumers’ valuation of intrinsic food quality attributes can be captured by incorporating ‘information treatments’ in experimental auctions. We combine ‘exogenous’ information treatments such as a video broadcast and a radio transcript on the benefits of an improved rice processing technology with an ‘endogenous’ information treatment which elicits word-of-mouth exchange among consumers to assess the combined effect of exogenous and endogenous information on consumers’ valuation of improved parboiled rice in two urban markets in Benin. We find that exogenous information increases market share of the locally improved product by 14% to the expense of imported rice, an effect which is further amplified by 10–11% through endogenous information. Endogenous information has a dampening effect on value though; while video and radio transferred 6–12% of value from imported to local rice, word-of-mouth redistributed 2% of the value back to the competing product.