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Essays in the measurement of consumer preferences in experimental auction markets

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  • Fox, John Andrew

Abstract

This thesis applies a relatively new technique, laboratory experimental auctions, to examine consumer preferences for food products which have not yet reached the market. The auction used is a second-price (Vickrey) auction in which the highest bidder pays an amount equal to the second-highest bid. This auction has been shown to accurately reveal preferences because it eliminates the incentive to underbid true value which is present in a first-price auction;The experimental auction is used to examine preferences for two products; milk from cows treated with bovine somatotropin, and pork treated with irradiation. The applications feature real products, real money, and an explicit obligation to consume a food product. These features provide for elicitation of preferences in a non-hypothetical setting; the idea is to replicate the consumers decision environment when first faced with these new products in the grocery store;The three papers use experimental auctions to examine: (1) the relationship between preferences for irradiated pork as revealed in a hypothetical survey and those revealed in the non-hypothetical experimental auction, (2) the impact of favorable and unfavorable descriptions of food irradiation on preferences for irradiated pork, and (3) regional differences in preferences for milk produced with or without bovine somatotropin, and the impact of a detailed description of bovine somatotropin on preferences.

Suggested Citation

  • Fox, John Andrew, 1994. "Essays in the measurement of consumer preferences in experimental auction markets," ISU General Staff Papers 1994010108000012254, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:1994010108000012254
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    References listed on IDEAS

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    1. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    2. repec:bla:scandj:v:86:y:1984:i:4:p:468-84 is not listed on IDEAS
    3. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    4. 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.
    5. Shogren, Jason F. & Seung Y. Shin & Dermot J. Hayes & James B. Kliebenstein, 1994. "Resolving Differences in Willingness to Pay and Willingness to Accept," American Economic Review, American Economic Association, vol. 84(1), pages 255-270, March.
    6. Kagel, John H & Harstad, Ronald M & Levin, Dan, 1987. "Information Impact and Allocation Rules in Auctions with Affiliated Private Values: A Laboratory Study," Econometrica, Econometric Society, vol. 55(6), pages 1275-1304, November.
    7. Buhr, Brian L. & Hayes, Dermot J. & Shogren, Jason F. & Kliebenstein, James B., 1993. "Valuing Ambiguity: The Case Of Genetically Engineered Growth Enhancers," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(2), pages 1-10, December.
    8. Shogren, Jason F., 1993. "Experimental Markets and Environmental Policy," Agricultural and Resource Economics Review, Cambridge University Press, vol. 22(2), pages 117-129, October.
    9. Fox, John A. & Hayes, Dermot J. & Kliebenstein, James & Shogren, Jason F., 1994. "Consumer Acceptability of Milk from Cows Treated with Bovine Somatotropin," Staff General Research Papers Archive 702, Iowa State University, Department of Economics.
    10. James R. Blaylock & W. Noel Blisard, 1992. "U.S. Cigarette Consumption: The Case of Low-Income Women," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(3), pages 698-705.
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    Cited by:

    1. Hurley, Sean P. & Kliebenstein, James B., 2003. "Interpreting Bids From A Vickrey Auction When There Are Public Good Attributes," 2003 Annual meeting, July 27-30, Montreal, Canada 21965, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Hurley, Sean P. & Kliebenstein, James B., 2005. "An Examination of Additively Separable Willingness-To-Pay for Environmental Attributes: Evidence from a Pork Experiment," 2005 Annual meeting, July 24-27, Providence, RI 19370, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Hurley, Sean P. & Miller, Douglas J. & Kliebenstein, James B., 2004. "Estimating Willingness-To-Pay Using A Polychotomous Choice Function: An Application To Pork Products With Environmental Attributes," 2004 Annual meeting, August 1-4, Denver, CO 19924, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Hurley, Sean P. & Kliebenstein, James B., 2003. "A Tale Of Two Premiums- Examining Bids From A Multiple Round Vickrey Auction With Differing Information Sets," 2003 Annual meeting, July 27-30, Montreal, Canada 22192, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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