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Is the Experimental Auction a Dynamic Market?

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Author Info
Jay Corrigan ()

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Abstract

Experimental auctions are generally thought of as static markets. This paper presents the results of an experimental auction designed to test whether participants’ perceptions regarding the relative difficulty of delaying or reversing a transaction outside the experimental market systematically affect their willingness-to-pay bids. The results show that auction participants’ perceptions significantly impact their bids in a manner that is consistent with real option theory. These results suggest that economists must be careful to consider the existence of outside markets when designing experimental auctions. Copyright Springer 2005

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File URL: http://hdl.handle.net/10.1007/s10640-004-6981-z
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Publisher Info
Article provided by European Association of Environmental and Resource Economists in its journal Environmental & Resource Economics.

Volume (Year): 31 (2005)
Issue (Month): 1 (05)
Pages: 35-45
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:kap:enreec:v:31:y:2005:i:1:p:35-45

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Web page: http://www.springerlink.com/link.asp?id=100263

For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).

Related research
Keywords: commitment cost; dynamic markets; experimental auctions; real option theory;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Coursey, Don L & Hovis, John L & Schulze, William D, 1987. "The Disparity between Willingness to Accept and Willingness to Pay Measures of Value," The Quarterly Journal of Economics, MIT Press, vol. 102(3), pages 679-90, August. [Downloadable!] (restricted)
  2. 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 255-70, March.
  3. Shogren, Jason F. & Crocker, Thomas D., 1994. "Rational risk valuation given sequential reduction opportunities," Economics Letters, Elsevier, vol. 44(3), pages 241-248. [Downloadable!] (restricted)
  4. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1325-48, December. [Downloadable!] (restricted)
  5. Zhao, Jinhua & Kling, Catherine L., 2001. "A new explanation for the WTP/WTA disparity," Economics Letters, Elsevier, vol. 73(3), pages 293-300, December. [Downloadable!] (restricted)
  6. Matthew C. Rousu & Wallace E. Huffman & Jason F. Shogren & Abebayehu Tegene, 2004. "Estimating the Public Value of Conflicting Information: The Case of Genetically Modified Foods," Land Economics, University of Wisconsin Press, vol. 80(1), pages 125-135. [Downloadable!] (restricted)
  7. J.L. Lusk & T. Feldkamp & T.C. Schroeder, 2004. "Experimental Auction Procedure: Impact on Valuation of Quality Differentiated Goods," Artefactual Field Experiments 0069, The Field Experiments Website. [Downloadable!]
    Other versions:
  8. J.L. Lusk & J.A. Fox & T.C. Schroeder & J. Mintert & M. Koohmaraie, 2001. "In-Store Valuation of Steak Tenderness," Framed Field Experiments 0058, The Field Experiments Website.
  9. Charles Noussair & StÈphane Robin & Bernard Ruffieux, 2004. "Do Consumers Really Refuse To Buy Genetically Modified Food?," Economic Journal, Royal Economic Society, vol. 114(492), pages 102-120, 01. [Downloadable!] (restricted)
  10. Fox, John & Hayes, Dermot & Shogren, Jay, 2002. "Consumer Preferences for Food Irradiation: How Favorable and Unfavorable Descriptions Affect Preferences for Irradiated Pork in Experimental Auctions," Staff General Research Papers 5207, Iowa State University, Department of Economics.
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  11. Noussair, Charles & Robin, Stephane & Ruffieux, Bernard, 2002. "Do consumers not care about biotech foods or do they just not read the labels?," Economics Letters, Elsevier, vol. 75(1), pages 47-53, March. [Downloadable!] (restricted)
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  12. Jay R. Corrigan & Matthew C. Rousu, 2006. "The Effect of Initial Endowments in Experimental Auctions," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 88(2), pages 448-457, 05. [Downloadable!] (restricted)
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  13. Glenn W. Harrison & Ronald M. Harstad & E. Elisabet Rutstr–m, 2004. "Experimental Methods and Elicitation of Values," Experimental Economics, Springer, vol. 7(2), pages 123-140, 06. [Downloadable!]
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  14. Zhao, Jinhua & Kling, Catherine L., 2000. "Willingness-to-Pay, Compensating Variation, and the Cost of Commitment," Staff General Research Papers 1875, Iowa State University, Department of Economics.
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  15. Jayson L. Lusk, 2003. "An Experimental Test of the Commitment Cost Theory," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 85(5), pages 1316-1322, December. [Downloadable!] (restricted)
  16. Hayes, Dermot J. & Shogren, Jason F. & Shin, Seung Youll & Kliebenstein, James B., 1995. "Valuing Food Safety in Experimental Auction Markets," Staff General Research Papers 835, Iowa State University, Department of Economics.
  17. Matthew Rousu & Wallace E. Huffman & Jason F. Shogren & Abebayehu Tegene, 2004. "Are United States Consumers Tolerant of Genetically Modified Foods?," Review of Agricultural Economics, American Agricultural Economics Association, vol. 26(1), pages 19-31, 02. [Downloadable!] (restricted)
  18. Kolstad, Charles D. & Guzman, Rolando M., 1999. "Information and the Divergence between Willingness to Accept and Willingness to Pay," Journal of Environmental Economics and Management, Elsevier, vol. 38(1), pages 66-80, July. [Downloadable!] (restricted)
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  19. Shogren, Jason F & List, John A & Hayes, Dermot J, 2000. " Preference Learning in Consecutive Experimental Auctions," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 82(4), pages 1016-21, November. [Downloadable!] (restricted)
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  20. Shogren, Jason F. & Margolis, Michael & Koo, Cannon & List, John A., 2001. "A random nth-price auction," Journal of Economic Behavior & Organization, Elsevier, vol. 46(4), pages 409-421, December. [Downloadable!] (restricted)
  21. Davis, Douglas D & Williams, Arlington W, 1991. "The Hayek Hypothesis in Experimental Auctions: Institutional Effects and Market Power," Economic Inquiry, Oxford University Press, vol. 29(2), pages 261-74, April.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jay Corrigan & Catherine Kling & Jinhua Zhao, 2008. "Willingness to Pay and the Cost of Commitment: An Empirical Specification and Test," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(2), pages 285-298, June. [Downloadable!] (restricted)
  2. Corrigan, Jay R., 2006. "The Reverse Auction: A New Approach to Experimental Auction Valuation," 2006 Annual meeting, July 23-26, Long Beach, CA 21449, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  3. Jay R. Corrigan & Matthew C. Rousu, 2006. "The Effect of Initial Endowments in Experimental Auctions," Working Papers 0601, Kenyon College, Department of Economics. [Downloadable!]
    Other versions:
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