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The role of reference prices in experimental auctions

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  • Drichoutis, Andreas C.
  • Lazaridis, Panagiotis
  • Nayga Jr., Rodolfo M.

Abstract

We examine the role of reference prices (field prices) in willingness to pay studies involving experimental auctions. Using a 2nd price Vickrey auction, we find that provision of reference prices increases bid values.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 99 (2008)
Issue (Month): 3 (June)
Pages: 446-448

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Handle: RePEc:eee:ecolet:v:99:y:2008:i:3:p:446-448

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Web page: http://www.elsevier.com/locate/ecolet

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References

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  1. David H. Reiley, 2006. "Field experiments on the effects of reserve prices in auctions: more Magic on the Internet," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 195-211, 03.
  2. Glenn Harrison, 2006. "Experimental Evidence on Alternative Environmental Valuation Methods," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(1), pages 125-162, 05.
  3. Graham Loomes & Chris Starmer & Robert Sugden, 2003. "Do Anomalies Disappear in Repeated Markets?," Economic Journal, Royal Economic Society, vol. 113(486), pages C153-C166, March.
  4. John A. List & Jason F. Shogren, 1999. "Price Information and Bidding Behavior in Repeated Second-Price Auctions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 942-949.
  5. Helen R. Neill & Ronald G. Cummings & Philip T. Ganderton & Glenn W. Harrison & Thomas McGuckin, 1994. "Hypothetical Surveys and Real Economic Commitments," Land Economics, University of Wisconsin Press, vol. 70(2), pages 145-154.
  6. Jay R. Corrigan & Matthew C. Rousu, 2006. "Posted Prices and Bid Affiliation: Evidence from Experimental Auctions," Working Papers 0602, Kenyon College, Department of Economics.
  7. Corrigan, Jay R. & Rousu, Matthew C., 2006. "AJAE Appendix: Posted Prices and Bid Affiliation: Evidence from Experimental Auctions," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 88(4), November.
  8. Harrison, Glen W. & Ronald M. Harstad & E. Elisabet Rutström, 1995. "Experimental Methods and Elicitation of Values," Discussion Paper Serie B 349, University of Bonn, Germany.
  9. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  10. Jack Knetsch & Fang-Fang Tang & Richard Thaler, 2001. "The Endowment Effect and Repeated Market Trials: Is the Vickrey Auction Demand Revealing?," Experimental Economics, Springer, vol. 4(3), pages 257-269, December.
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Citations

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Cited by:
  1. Nicholas Shunda, 2007. "Auctions with a Buy Price: The Case of Reference-Dependent Preferences," Working papers 2007-42, University of Connecticut, Department of Economics.
  2. Gracia, Azucena & de Magistris, Tiziana & Nayga, Rodolfo M., Jr., 2011. "Willingness to pay for a local food label for lamb meat in Spain," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114607, European Association of Agricultural Economists.
  3. McAdams, Callie P. & Palma, Marco A. & Hall, Charles R. & Ishdorj, Ariun, 2013. "A Nonhypothetical Ranking and Auction Mechanism for Novel Products," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 45(01), February.
  4. Hellyer, Nicole Elizabeth & Fraser, Iain & Haddock-Fraser, Janet, 2010. "Food Choice, Nutritional Information And Functional Ingredients: An Experimental Auction Employing Bread," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany 116424, European Association of Agricultural Economists & Agricultural and Applied Economics Association.
  5. Disdier, Anne-Célia & Marette, Stéphan & Millet, Guy, 2013. "Are consumers concerned about palm oil? Evidence from a lab experiment," Food Policy, Elsevier, vol. 43(C), pages 180-189.
  6. Shi, Lijia & Gao, Zhifeng & Chen, Xuqi, 2014. "The cross-price effect on willingness-to-pay estimates in open-ended contingent valuation," Food Policy, Elsevier, vol. 46(C), pages 13-21.
  7. Isabell Goldberg & Jutta Roosen & Rodolfo M. Nayga, 2009. "Parental response to health risk information: experimental results on willingness-to-pay for safer infant milk formula," Health Economics, John Wiley & Sons, Ltd., vol. 18(5), pages 503-518.
  8. Andreas Drichoutis & Rodolfo Nayga & Panagiotis Lazaridis & Beom Park, 2011. "A Consistent Econometric Test for Bid Interdependence in Repeated Second-Price Auctions with Posted Prices," Atlantic Economic Journal, International Atlantic Economic Society, vol. 39(4), pages 329-341, December.
  9. Laurent Muller & Bernard Ruffieux, 2011. "Do price-tags influence consumers’ willingness to pay? On the external validity of using auctions for measuring value," Experimental Economics, Springer, vol. 14(2), pages 181-202, May.
  10. Hudson, Darren & Gallardo, Rosa Karina & Hanson, Terrill R., 2012. "A Comparison Of Choice Experiments And Actual Grocery Store Behavior: An Empirical Application To Seafood Products," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 44(01), February.
  11. Hellyer, Nicole Elizabeth & Fraser, Iain & Haddock-Fraser, Janet, 2012. "Food choice, health information and functional ingredients: An experimental auction employing bread," Food Policy, Elsevier, vol. 37(3), pages 232-245.
  12. Chakravarty, Surajeet & Ghosh, Sudeep, 2011. "An experimental investigation of entry cost effects in sealed-bid dollar auctions," Economics Letters, Elsevier, vol. 111(2), pages 122-124, May.

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