Confounded by the Field: Bidding in Food Auctions When Field Prices Are Increasing
Auction experiments are commonly used to determine consumersâ€™ willingness to pay for various food items. While their non-hypothetical nature is a positive, market substitutes create a probable confounding of bids by field prices. This study examines the influence of field prices on bids for four foods in two versions by conducting auctions before and after large price increases in 2007. Results show that bids were capped at given field prices and were significantly higher in sessions conducted after store prices increased. Percentage premiums, however, were not significantly different across sessions, suggesting that effects of field prices could be reduced. Overall, researchers must be conscious of how field prices affect bids.
Volume (Year): 39 (2010)
Issue (Month): 2 (April)
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- Corrigan, Jay R. & Rousu, Matthew C., 2008.
"Testing Whether Field Auction Experiments Are Demand Revealing in Practice,"
Journal of Agricultural and Resource Economics,
Western Agricultural Economics Association, vol. 33(2), August.
- Jay R. Corrigan & Matthew C. Rousu, 2008. "Testing Whether Field Auction Experiments are Demand Revealing in Practice," Working Papers 0804, Kenyon College, Department of Economics.
- Jay Corrigan & Matthew Rousu, 2008. "Testing whether field auction experiments are demand revealing in practice," Framed Field Experiments 00161, The Field Experiments Website.
- Drichoutis, Andreas C. & Lazaridis, Panagiotis & Nayga Jr., Rodolfo M., 2008. "The role of reference prices in experimental auctions," Economics Letters, Elsevier, vol. 99(3), pages 446-448, June.