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A Comparison of Auction and Choice Experiment: An Application to Consumer Willingness to Pay for Rice with Improved Storage Management

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  • Su, Lianfan
  • Adam, Brian D.
  • Lusk, Jayson L.
  • Arthur, Frank

Abstract

Experimental auction and discrete choice experiment are two popular value elicitation methods. Theoretically they should yield the same results but empirical results have been mixed (e.g., Lusk and Schroeder 2004, 2006; Corrigan et al. 2010.) This study uses both methods to determine consumers’ willingness to pay (WTP) for rice with improved insect control and for rice stored using Integrated Pest Management (IPM). This study investigates two potential reasons – anchoring and information – for why some studies have found apparent inconsistencies between auction and choice experiment results. Results indicate that consumers’ WTP derived in the auction and choice experiments are significantly different. Consumers’ average bids in the auction are higher than their willingness to pay calculated from the choice experiments. Further, anchoring in the choice experiment appears to be an explanation for the discrepancy. Providing consumers with more product information help consumers behave more consistent in terms of having same preference ranking for different rice samples in the auction and the choice experiments, but their average does not substantially affect the discrepancy.

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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania with number 103975.

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Date of creation: 2011
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Handle: RePEc:ags:aaea11:103975

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Keywords: 2nd price auction; choice experiment; price level; information; Consumer/Household Economics; Crop Production/Industries;

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  1. Jason F. Shogren & John A. Fox, 1996. "Consumer Preferences for Fresh Food Items with Multiple Quality Attributes: Evidence from an Experimental Auction of Pork Chops," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 916-923.
  2. Erik Magnusson & J. A. L. Cranfield, 2005. "Consumer Demand for Pesticide Free Food Products in Canada: A Probit Analysis," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 53(1), pages 67-81, 03.
  3. W. Bruce Traill, 2004. "Effect of information about benefits of biotechnology on consumer acceptance of genetically modified food: evidence from experimental auctions in the United States, England, and France," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(2), pages 179-204, June.
  4. Batres-Marquez, S. Patricia & Jensen, Helen H. & Upton, J. L., 2010. "Rice Consumption in the United States: Evidence from Food Consumption Surveys," Staff General Research Papers 31412, Iowa State University, Department of Economics.
  5. Alfnes, Frode & Guttormsen, Atle G. & Steine, Gro & Kolstad, Kari, 2005. "Consumers' Willingness To Pay For The Color Of Salmon:A Choice Experiment With Real Economic Incentives," 2005 Annual meeting, July 24-27, Providence, RI 19126, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  6. Chengyan Yue & Frode Alfnes & Helen H. Jensen, 2006. "Discounting Spotted Apples: Investigating Consumers' Willingness to Accept Cosmetic Damage in an Organic Product," Center for Agricultural and Rural Development (CARD) Publications 06-wp436, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  7. Kathleen Brooks & Jayson L. Lusk, 2010. "Stated and Revealed Preferences for Organic and Cloned Milk: Combining Choice Experiment and Scanner Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(4), pages 1229-1241.
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