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Negative Values in Vickrey Auctions

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  • David L. Dickinson

Abstract

Some people assign negative values for new products sold on laboratory auction blocks (i.e., irradiated meat). We explore bidding behavior in two Vickrey auctions when people have positive- and negative-induced values for the good. Aggregate bidding in the second-price auction is precise but biased—highest-value positive bidders tend to overstate benefits, whereas lowest-negative bidders understate losses. In contrast, bidding behavior in the random nth-price auction is demand revealing irrespective of induced value, but it is imprecise. Examining on- and off-margin bidding behavior, we cannot conclude that any segments of demand are significantly different than the demand revealing regression line. Copyright 2004, Oxford University Press.

Suggested Citation

  • David L. Dickinson, 2004. "Negative Values in Vickrey Auctions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 222-235.
  • Handle: RePEc:oup:ajagec:v:86:y:2004:i:1:p:222-235
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    File URL: http://hdl.handle.net/10.1111/j.0092-5853.2004.00574.x
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    Citations

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    Cited by:

    1. Feuz, Dillon M. & Umberger, Wendy J. & Calkins, Chris R. & Sitz, Bethany M., 2004. "U.S. Consumers' Willingness to Pay for Flavor and Tenderness in Steaks as Determined with an Experimental Auction," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(03), December.
    2. Jacquemet, Nicolas & Joule, Robert-Vincent & Luchini, Stéphane & Shogren, Jason F., 2013. "Preference elicitation under oath," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 110-132.
    3. Drichoutis, Andreas & Lusk, Jayson & Nayga, Rodolfo, 2013. "The veil of experimental currency units," MPRA Paper 46906, University Library of Munich, Germany.
    4. repec:hal:cesptp:halshs-00731244 is not listed on IDEAS
    5. Lee, Ji Yong & Han, Doo Bong & Nayga Jr, Rodolfo M. & Lim, Song-Soo, 2011. "Valuing traceability of imported beef in Korea: an experimental auction approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(3), September.
    6. repec:hal:journl:halshs-00731244 is not listed on IDEAS
    7. Han, Doo Bong & Nayga, Rodolfo M., Jr. & Lee, Ji Yong & Yoon, Jong Min, 2012. "Assessing Korean Consumers’ Valuation for Domestic and Imported Rice: Importance of Country of Origin and Food Miles Information," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119817, Southern Agricultural Economics Association.
    8. Ward, Ruby A. & Bailey, DeeVon & Jensen, Robert T., 2005. "An American BSE Crisis: Has it affected the Value of Traceability and Country-of-Origin Certifications for US and Canadian Beef?," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 8(02).
    9. Hurley, Terrance M. & Yue, Chengyan & Anderson, Neil O., 2013. "Polarized Preferences in Homegrown Value Auctions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(2), August.
    10. Bernard, John C. & Zhang, Chao & Gifford, Katie, 2006. "An Experimental Investigation of Consumer Willingness to Pay for Non-GM Foods When an Organic Option Is Present," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 35(2), October.
    11. Lee, Ji Yong & Fox, John A. (Sean), 2015. "Bidding behavior in experimental auctions with positive and negative values," Economics Letters, Elsevier, vol. 136(C), pages 151-153.
    12. Lee, Ji Yong & Fox, John A. (Sean), 2015. "Strategic bidding in a private value experimental auction with positive and negative bids," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 204984, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    13. Vollan, Bjorn & Prediger, Sebastian & Frolich, Markus, 2010. "The influence of collective property rights on grazing management in a semi-arid region," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 5(2), December.

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