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Auction mechanisms and the measurement of WTP and WTA

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Listed:
  • Shogren, Jason F.
  • Cho, Sungwon
  • Koo, Cannon
  • List, John
  • Park, Changwon
  • Polo, Pablo
  • Wilhelmi, Robert

Abstract

We evaluate the impact of three auction mechanisms - the Becker-DeGroot-Marschak mechanism, the second-price auction, and the random nth-price auction - in the measurement of willingness to pay (WTP) and willingness to accept (WTA) measures of value. Our results show that initial bidding in trial 1 in each auction does not contradict the endowment effect; but that, if it is the endowment effect that governs people's initial bidding behavior, it can be eliminated with repetitions of a second-price or random nth-price auction; and if the thesis is that the effect should persist across auctions and across trials is right, our results suggest that there is no fundamental endowment effect.
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Suggested Citation

  • Shogren, Jason F. & Cho, Sungwon & Koo, Cannon & List, John & Park, Changwon & Polo, Pablo & Wilhelmi, Robert, 2001. "Auction mechanisms and the measurement of WTP and WTA," Resource and Energy Economics, Elsevier, vol. 23(2), pages 97-109, April.
  • Handle: RePEc:eee:resene:v:23:y:2001:i:2:p:97-109
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    References listed on IDEAS

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