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The role of reference prices in experimental auctions

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  • Drichoutis, Andreas C.
  • Lazaridis, Panagiotis
  • Nayga Jr., Rodolfo M.

Abstract

We examine the role of reference prices (field prices) in willingness to pay studies involving experimental auctions. Using a 2nd price Vickrey auction, we find that provision of reference prices increases bid values.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:ecolet:v:99:y:2008:i:3:p:446-448
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    2. repec:ken:wpaper:0602 is not listed on IDEAS
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    Cited by:

    1. Shunda, Nicholas, 2009. "Auctions with a buy price: The case of reference-dependent preferences," Games and Economic Behavior, Elsevier, vol. 67(2), pages 645-664, November.
    2. Caputo, Vincenzina & Lusk, Jayson L. & Nayga, Rodolfo M., 2018. "Choice experiments are not conducted in a vacuum: The effects of external price information on choice behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 335-351.
    3. 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.
    4. Laurent Muller & Bernard Ruffieux, 2011. "Do price-tags influence consumers’ willingness to pay? On the external validity of using auctions for measuring value," Experimental Economics, Springer;Economic Science Association, vol. 14(2), pages 181-202, May.
    5. Andreas Drichoutis & Rodolfo Nayga & Panagiotis Lazaridis & Beom Park, 2011. "A Consistent Econometric Test for Bid Interdependence in Repeated Second-Price Auctions with Posted Prices," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 39(4), pages 329-341, December.
    6. Chavez, Daniel & Palma, Marco, 2015. "Off the reservation: Pushing the bounds of rationality in experimental auctions," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 202164, Agricultural and Applied Economics Association.
    7. Orset, Caroline, 2021. "Is information a good policy instrument to influence the energy behaviour of households?," Energy Economics, Elsevier, vol. 102(C).
    8. 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), pages 1-13, April.
    9. Levan Elbakidze & Rodolfo M. Nayga Jr. & Hao Li & Chris McIntosh, 2014. "Value elicitation for multiple quantities of a quasi-public good using open ended choice experiments and uniform price auctions," Agricultural Economics, International Association of Agricultural Economists, vol. 45(2), pages 253-265, March.
    10. Kechagia, Varvara & Drichoutis, Andreas C., 2017. "The effect of olfactory sensory cues on willingness to pay and choice under risk," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 70(C), pages 33-46.
    11. Gracia, Azucena & de Magistris, Tiziana & Nayga, Rodolfo M., Jr., 2011. "Willingness to pay for a local food label for lamb meat in Spain," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114607, European Association of Agricultural Economists.
    12. Hudson, Darren & Gallardo, Rosa Karina & Hanson, Terrill R., 2012. "A Comparison Of Choice Experiments And Actual Grocery Store Behavior: An Empirical Application To Seafood Products," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 44(1), pages 1-14, February.
    13. Chakravarty, Surajeet & Ghosh, Sudeep, 2011. "An experimental investigation of entry cost effects in sealed-bid dollar auctions," Economics Letters, Elsevier, vol. 111(2), pages 122-124, May.
    14. Dominic Lemken & Mandy Knigge & Stephan Meyerding & Achim Spiller, 2017. "The Value of Environmental and Health Claims on New Legume Products: A Non-Hypothetical Online Auction," Sustainability, MDPI, vol. 9(8), pages 1-18, July.
    15. 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(1), pages 35-52, February.
    16. 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.
    17. 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.
    18. Dinah Pura T. Depositario & Rodolfo M. Nayga, Jr. & Ximing Wu & Tiffany P. Laude, 2009. "Effects of Information on Consumers' Willingness to Pay for Golden Rice," Asian Economic Journal, East Asian Economic Association, vol. 23(4), pages 457-476, December.
    19. Fabio Verneau & Francesco La Barbera & Teresa Del Giudice, 2017. "The Role of Implicit Associations in the Hypothetical Bias," Journal of Consumer Affairs, Wiley Blackwell, vol. 51(2), pages 312-328, July.
    20. Sebastian Lehmann, 2014. "Toward an Understanding of the BDM: Predictive Validity, Gambling Effects, and Risk Attitude," FEMM Working Papers 150001, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    21. Shi, Lijia & Gao, Zhifeng & Chen, Xuqi, 2014. "The cross-price effect on willingness-to-pay estimates in open-ended contingent valuation," Food Policy, Elsevier, vol. 46(C), pages 13-21.
    22. Disdier, Anne-Célia & Marette, Stéphan & Millet, Guy, 2013. "Are consumers concerned about palm oil? Evidence from a lab experiment," Food Policy, Elsevier, vol. 43(C), pages 180-189.
    23. Dolgopolova, Irina & Teuber, Ramona & Roosen, Jutta, 2017. "The Reference Price Is Not The Limit: Analysis Of Consumer Valuations In Second-price Vickrey Auction," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 260882, European Association of Agricultural Economists.
    24. Isabell Goldberg & Jutta Roosen & Rodolfo M. Nayga, 2009. "Parental response to health risk information: experimental results on willingness‐to‐pay for safer infant milk formula," Health Economics, John Wiley & Sons, Ltd., vol. 18(5), pages 503-518, May.

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