Advanced Search

Auction Bids and Shopping Choices

Contents:

Author Info

  • Jayson L. Lusk

    (Oklahoma State Universtiy)

  • Ted C. Schroeder

    (Kansas State University)

Abstract

Economists and marketers are often interested in estimating demand for new products and in valuing other non-market goods. Due to the increasing recognition that elicited valuations are sensitive to whether decisions are hypothetical, economists have begun to utilize incentive compatible mechanisms with real goods and real money. This paper investigates preferences expressed in two of the most popular elicitation formats: experimental auctions and discrete choice experiments. We compare the bidding behavior of consumers in four different incentive compatible auctions to the behavior of consumers who made non-hypothetical discrete choices between five goods. Despite the fact that the choice task and auction mechanisms are incentive compatible, we find that auction bids were significantly lower, as much as two times lower in many cases, than valuations implied from choices. We also find that auction data imply own-price elasticities of demand for higher quality products that are significantly more elastic than those implied from choice data. Nevertheless, for the five goods evaluated, individuals' preference orderings were consistent across value elicitation methods. These findings hold important implications for economists' view of preferences and may provide some insight into retailers' prevalent use of markets with posted-prices: individuals were more willing to part with their cash when making choices versus bids.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.bepress.com/cgi/viewcontent.cgi?article=1539&context=bejeap
Download Restriction: no

Bibliographic Info

Article provided by Berkeley Electronic Press in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): advances.6 (2006)
Issue (Month): 1 ()
Pages: 4
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:bpj:bejeap:v:advances.6:y:2006:i:1:n:4

Contact details of provider:
Web page: http://www.bepress.com/bejeap

For corrections or technical questions regarding this item, or to correct its listing, contact: (Nickolas Zeibig-Kichas).

Related research

Keywords: auction; choice; experiment; pricing; procedural invariance; valuation;

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
Cited by:
  1. Yue, Chengyan & Hall, Charles R. & Behe, Bridget K. & Campbell, Benjamin L. & Dennis, Jennifer H. & Lopez, Roberto G., 2010. "Are consumers willing to pay more for biodegradable containers than for plastic ones? Evidence from hypothetical conjoint analysis and nonhypothetical experimental auctions," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 60968, Agricultural and Applied Economics Association.
  2. Marette, Stéphan & Roosen, Jutta & Blanchemanche, Sandrine, 2008. "Health information and substitution between fish: Lessons from laboratory and field experiments," Food Policy, Elsevier, vol. 33(3), pages 197-208, June.
  3. Michaud, C. & Llerena, D., 2008. "Eliciting values for environmental attributes of a private good using a real choice experiment," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44234, European Association of Agricultural Economists.
  4. Jutta Roosen & Stephan Marette & Sandrine Blanchemanche, 2010. "Value Elicitation using BDM and a Discrete Choice Mechanism," Economics Bulletin, AccessEcon, vol. 30(2), pages 1554-1563.
  5. Stéphan Marette & Jayson L. Lusk & Jutta Roosen, 2010. "Welfare Impact of Information with Experiments: The Crucial Role of the Price Elasticity of Demand," Economics Bulletin, AccessEcon, vol. 30(2), pages 1585-1593.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:bpj:bejeap:v:advances.6:y:2006:i:1:n:4

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nickolas Zeibig-Kichas).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.