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Mitigating overbidding behavior in agribusiness and food marketing research: Results from induced value hybrid auction experiments

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  • David L. Ortega
  • Robert S. Shupp
  • Rodolfo M. Nayga
  • Jayson L. Lusk

Abstract

Experimental auctions are a popular and useful tool in understanding demand for food and agricultural products. Bidding behavior often deviates from theoretical predictions in traditional Vickrey and Becker–DeGroot–Marschak (BDM) auction mechanisms. We propose and explore the bidding behavior and demand revealing properties of a hybrid first price‐Vickrey auction and a hybrid first price‐BDM mechanism. Results from a between‐sample, induced value experiment reveal that, relative to traditional mechanisms, the hybrid first price‐Vickrey auction and hybrid first price‐BDM mechanism significantly reduce participants’ likelihood of overbidding, and on average yield bids closer to true valuations. We discuss potential limitations to these hybrid mechanisms as well as implications for their use in eliciting homegrown values that are important for agribusiness and food marketing research. [EconLit citations: C8, C9, Q1, Q13]

Suggested Citation

  • David L. Ortega & Robert S. Shupp & Rodolfo M. Nayga & Jayson L. Lusk, 2018. "Mitigating overbidding behavior in agribusiness and food marketing research: Results from induced value hybrid auction experiments," Agribusiness, John Wiley & Sons, Ltd., vol. 34(4), pages 887-893, October.
    • Handle: RePEc:wly:agribz:v:34:y:2018:i:4:p:887-893
    DOI: 10.1002/agr.21569
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    References listed on IDEAS

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    Cited by:

    1. Ward, Patrick S. & Gupta, Shweta & Singh, Vartika & Ortega, David L. & Gautam, Shriniwas, 2020. "What is the intrinsic value of fertilizer? Experimental value elicitation and decomposition in the hill and terai regions of Nepal," Food Policy, Elsevier, vol. 90(C).
    2. Daniele Asioli & Adriana Mignani & Frode Alfnes, 2021. "Quick and easy? Respondent evaluations of the Becker–DeGroot–Marschak and multiple price list valuation mechanisms," Agribusiness, John Wiley & Sons, Ltd., vol. 37(2), pages 215-234, April.

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