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Confounded by the Field: Bidding in Food Auctions When Field Prices Are Increasing

Author

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  • Bernard, John C.
  • He, Na

Abstract

Auction experiments are commonly used to determine consumers’ 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.

Suggested Citation

  • Bernard, John C. & He, Na, 2010. "Confounded by the Field: Bidding in Food Auctions When Field Prices Are Increasing," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 39(2), April.
  • Handle: RePEc:ags:arerjl:90823
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    File URL: http://purl.umn.edu/90823
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    References listed on IDEAS

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    1. 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.
    2. 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.
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    Cited by:

    1. Messer, Kent D. & Murphy, James J., 2010. "FOREWORD: Special Issue on Experimental Methods in Environmental, Natural Resource, and Agricultural Economics," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 39(2), April.
    2. repec:bla:jconsa:v:51:y:2017:i:2:p:312-328 is not listed on IDEAS
    3. McAdams, Callie & Palma, Marco A. & Hall, Charles & Ishdorj, Ariun, 2013. "A Nonhypothetical Ranking and Auction Mechanism for Novel Products," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 45(01), pages 35-52, February.
    4. Tiziana De Magistris & Teresa Del Giudice & Fabio Verneau, 2015. "The Effect of Information on Willingness to Pay for Canned Tuna Fish with Different Corporate Social Responsibility (CSR) Certification: A Pilot Study," Journal of Consumer Affairs, Wiley Blackwell, vol. 49(2), pages 457-471, July.
    5. Hellyer, Nicole Elizabeth & Fraser, Iain & Haddock-Fraser, Janet, 2010. "Food Choice, Nutritional Information And Functional Ingredients: An Experimental Auction Employing Bread," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany 116424, European Association of Agricultural Economists;Agricultural and Applied Economics Association.
    6. Hellyer, Nicole Elizabeth & Fraser, Iain & Haddock-Fraser, Janet, 2012. "Food choice, health information and functional ingredients: An experimental auction employing bread," Food Policy, Elsevier, vol. 37(3), pages 232-245.
    7. Tebbe, Eva & von Blanckenburg, Korbinian, 2017. "Does willingness to pay increase with the number and strictness of sustainability labels?," Annual Conference 2016 (Augsburg): Demographic Change 145556, Verein für Socialpolitik / German Economic Association.

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