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Examining Projection Bias in Experimental Auctions: The Role of Hunger and Immediate Gratification

Author

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  • Teresa, Briz
  • Drichoutis, Andreas
  • Nayga, Rodolfo
  • House, Lisa

Abstract

The relevance of projection bias in decision making processes has been widely studied, but not specifically in experimental auctions. We study the role of projection bias in experimental auctions by examining the bidding behavior of hungry and non-hungry subjects on food products delivered either immediately after the auction or in one week’s time. Results indicate that the difference in bids between a hot state (hunger) and a cold state (satiation) almost doubles when subjects have to predict their future tastes versus when they bid for a product intended for immediate consumption. More specifically, when subjects have to predict their future willingness to pay from their current tastes, they tend to over-predict their hunger and under-predict satiation.

Suggested Citation

  • Teresa, Briz & Drichoutis, Andreas & Nayga, Rodolfo & House, Lisa, 2011. "Examining Projection Bias in Experimental Auctions: The Role of Hunger and Immediate Gratification," MPRA Paper 44764, University Library of Munich, Germany, revised 05 Mar 0013.
    • Handle: RePEc:pra:mprapa:44764
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    Cited by:

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    2. Naphtal Habiyaremye & Nadhem Mtimet & Emily A. Ouma & Gideon A. Obare, 2023. "Consumers' willingness to pay for safe and quality milk: Evidence from experimental auctions in Rwanda," Agribusiness, John Wiley & Sons, Ltd., vol. 39(4), pages 1049-1074, October.
    3. Jacob Lund Orquin & Jacob Dalgaard Christensen & Carl-Johan Lagerkvist, 2020. "A meta-analytical and experimental examination of blood glucose effects on decision making under risk," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 15(6), pages 1024-1036, November.
    4. repec:cup:judgdm:v:15:y:2020:i:6:p:1024-1036 is not listed on IDEAS
    5. Clot, Sophie & Grolleau, Gilles & Ibanez, Lisette, 2022. "Projection bias in environmental beliefs and behavioural intentions - An application to solar panels and eco-friendly transport," Energy Policy, Elsevier, vol. 160(C).
    6. repec:ags:aaea22:335501 is not listed on IDEAS
    7. Tiziana de‐Magistris & Belinda López‐Galán & Petjon Ballco, 2022. "Do virtual reality experiments replicate projection bias phenomena? Examining the external validity of a virtual supermarket," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 20-34, February.
    8. Youenn Loheac, 2019. "Faim et décisions intertemporelles : littérature expérimentale et illustration empirique," Post-Print halshs-02472148, HAL.
    9. Tiziana de-Magistris & Azucena Gracia, 2016. "Assessing Projection Bias in Consumers’ Food Preferences," PLOS ONE, Public Library of Science, vol. 11(2), pages 1-11, February.

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    More about this item

    Keywords

    Experimental auction; willingness to pay; projection bias; hunger;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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