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Repeated Rounds with Price Feedback in Experimental Auction Valuation: An Adversarial Collaboration

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  • Jay R. Corrigan
  • Andreas C. Drichoutis
  • Jayson L. Lusk
  • Rodolfo M. Nayga
  • Matthew C. Rousu

Abstract

It is generally thought that market outcomes are improved with the provision of market information. As a result, the use of repeated rounds with price feedback has become standard practice in the applied experimental auction valuation literature. We conducted two experiments to determine how rationally subjects behave with and without price feedback in a second-price auction. Results from an auction for lotteries show that subjects exposed to price feedback are significantly more likely to commit preference reversals. However, this irrationality diminishes in later rounds. Results from an induced value auction indicate that price feedback caused greater deviations from the Nash equilibrium bidding strategy. Our results suggest that while bidding on the same item repeatedly improves auction outcomes (i.e., reduced preference reversals or bids closer to induced values), this improvement is not the result of price feedback. Copyright 2012, Oxford University Press.

Suggested Citation

  • Jay R. Corrigan & Andreas C. Drichoutis & Jayson L. Lusk & Rodolfo M. Nayga & Matthew C. Rousu, 2012. "Repeated Rounds with Price Feedback in Experimental Auction Valuation: An Adversarial Collaboration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(1), pages 97-115.
    • Handle: RePEc:oup:ajagec:v:94:y:2012:i:1:p:97-115
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    File URL: http://hdl.handle.net/10.1093/ajae/aar066
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    Cited by:

    1. Levan Elbakidze & Rodolfo M. Nayga, 2018. "The Adding-Up Test in an Incentivized Value Elicitation Mechanism: The Role of the Income Effect," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(3), pages 625-644, November.
    2. Bruner, David M. & Huth, William L. & McEvoy, David M. & Morgan, O. Ashton, 2014. "Consumer Valuation of Food Safety: The Case of Postharvest Processed Oysters," Agricultural and Resource Economics Review, Cambridge University Press, vol. 43(2), pages 300-318, August.
    3. Andreas C. Drichoutis & Varvara Kechagia, 2016. "The effect of olfactory sensory cues on economic decision making," Working Papers 2016-4, Agricultural University of Athens, Department Of Agricultural Economics.
    4. 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.
    5. 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.
    6. Su, Lianfan & Adam, Brian D. & Lusk, Jayson L. & Arthur, Frank, . "Anchoring, Information, and Fragility of Choice Experiments: An Application to Consumer Willingness to Pay for Rice with Improved Storage Management," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 42(2).
    7. Li, Yingzi & Gallardo, R. Karina & McCracken, Vicki A. & Yue, Chengyan & Luby, James & McFerson, James R., 2014. "How does the revelation of previous bid affect new bid?," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170439, Agricultural and Applied Economics Association.
    8. Andreas C. Drichoutis & Rodolfo M. Nayga Jr. & Stathis Klonaris, 2014. "Decision-making in Home-grown Value Auctions under Induced Mood States," Studies in Microeconomics, , vol. 2(2), pages 141-163, December.
    9. Erik Delaquis & Vanya Slavchevska & Conny J. M. Almekinders & Jonathan C. Newby & Chea Sareth & Chanphasouk Tanthapone & Paul C. Struik, 2024. "Increased farmer willingness to pay for quality cassava (Manihot esculenta Crantz) planting materials: evidence from experimental auctions in Cambodia and Lao PDR," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 16(3), pages 571-594, June.
    10. Ji Yong Lee & Rodolfo M. Nayga & Cary Deck & Andreas C. Drichoutis, 2020. "Cognitive Ability and Bidding Behavior in Second Price Auctions: An Experimental Study," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(5), pages 1494-1510, October.
    11. 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.
    12. Teresa Briz & Andreas Drichoutis & Lisa House, 2015. "Examining projection bias in experimental auctions: the role of hunger and immediate gratification," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 3(1), pages 1-17, December.
    13. Andreas C. Drichoutis & Jayson L. Lusk & Rodolfo M. Nayga, 2015. "The veil of experimental currency units in second price auctions," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 1(2), pages 182-196, December.
    14. Iftekhar, Md Sayed & Tisdell, John G., 2015. "Bidding and performance in multiple unit combinatorial fishery quota auctions: Role of information feedbacks," Marine Policy, Elsevier, vol. 62(C), pages 233-243.
    15. 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.
    16. Andreas C. Drichoutis & Stathis Klonaris & Georgia Papoutsi, 2016. "Do good things come in small packages? Willingness to pay for pomegranate wine and bottle size effects," Working Papers 2016-2, Agricultural University of Athens, Department Of Agricultural Economics.
    17. Maurizio Canavari & Andreas C. Drichoutis & Jayson L. Lusk & Rodolfo M. Nayga, Jr., 2018. "How to run an experimental auction: A review of recent advances," Working Papers 2018-5, Agricultural University of Athens, Department Of Agricultural Economics.
    18. Loureiro, Maria L. & Gracia, Azucena & Nayga, Rodolfo M., 2013. "Do experimental auction estimates pass the scope test?," Journal of Economic Psychology, Elsevier, vol. 37(C), pages 7-17.
    19. Drichoutis, Andreas C. & Nayga, Rodolfo M. & Lusk, Jayson L. & Lazaridis, Panagiotis, 2012. "When a risky prospect is valued more than its best possible outcome," Judgment and Decision Making, Cambridge University Press, vol. 7(1), pages 1-18, January.
    20. R. Karina Gallardo & Ines Hanrahan & Chengyan Yue & Vicki A. McCracken & James Luby & James R. McFerson & Carolyn Ross & Lilian Carrillo†Rodriguez, 2018. "Combining sensory evaluations and experimental auctions to assess consumers’ preferences for fresh fruit quality characteristics," Agribusiness, John Wiley & Sons, Ltd., vol. 34(2), pages 407-425, March.
    21. Gioacchino Pappalardo & Roberta Selvaggi & Salvatore Bracco & Gaetano Chinnici & Biagio Pecorino, 2018. "Factors affecting purchasing process of digestate: evidence from an economic experiment on Sicilian farmers’ willingness to pay," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-12, December.
    22. Despoina Alempaki & Emina Canic & Timothy L. Mullett & William J. Skylark & Chris Starmer & Neil Stewart & Fabio Tufano, 2019. "Reexamining How Utility and Weighting Functions Get Their Shapes: A Quasi-Adversarial Collaboration Providing a New Interpretation," Management Science, INFORMS, vol. 65(10), pages 4841-4862, October.

    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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