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Valuing Ambiguity: The Case of Genetically Engineered Growth Enhancers

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  • Buhr, Brian L.
  • Hayes, Dermot J.
  • Shogren, Jason F.
  • Kliebenstein, James B.

Abstract

A split-valuation method is developed and implemented to elicit the willingness to pay to consume-or avoid consuming-a product of ambiguous quality. The split-valuation method uses experimental auction markets to separate and value the positive and negative attributes of the ambiguous good. The results show that the method can be used to successfully value a good of ambiguous quality. Our application reveals that for a sample of students at a midwestern land-grant institution, the average respondent is willing to pay a premium for meat produced with the use of a genetically engineered growth enhancer that has 30% to 60% fewer calories and is 10% to 20% leaner.

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  • Buhr, Brian L. & Hayes, Dermot J. & Shogren, Jason F. & Kliebenstein, James B., 1993. "Valuing Ambiguity: The Case of Genetically Engineered Growth Enhancers," ISU General Staff Papers 199312010800001010, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:199312010800001010
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    1. McKee, Michael, 1989. "Intra-experimental income effects and risk aversion," Economics Letters, Elsevier, vol. 30(2), pages 109-115, August.
    2. Shogren, Jason F, 1990. "The Impact of Self-protection and Self-insurance on Individual Response to Risk," Journal of Risk and Uncertainty, Springer, vol. 3(2), pages 191-204, June.
    3. Menkhaus, Dale J. & Borden, George W. & Whipple, Glen D. & Hoffman, Elizabeth & Field, Ray A., 1992. "An Empirical Application Of Laboratory Experimental Auctions In Marketing Research," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(1), pages 1-12, July.
    4. Don L. Coursey & John L. Hovis & William D. Schulze, 1987. "The Disparity Between Willingness to Accept and Willingness to Pay Measures of Value," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(3), pages 679-690.
    5. Shin, Seung Youll & Kliebenstein, James & Hayes, Dermot J. & Shogren, Jason F., 1992. "Consumer Willingness to Pay for Safer Food Products," Staff General Research Papers Archive 546, Iowa State University, Department of Economics.
    6. Brookshire, David S & Coursey, Don L, 1987. "Measuring the Value of a Public Good: An Empirical Comparison of Elicitation Procedures," American Economic Review, American Economic Association, vol. 77(4), pages 554-566, September.
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