IDEAS home Printed from https://ideas.repec.org/a/oup/revage/v26y2004i2p170-185.html
   My bibliography  Save this article

The Usefulness of Experimental Auctions in Determining Consumers' Willingness-to-Pay for Quality-Differentiated Products

Author

Listed:
  • Wendy J. Umberger
  • Dillon M. Feuz

Abstract

The validity and effectiveness of using experimental auctions to elicit consumers' willingness-to-pay for closely related, quality-differentiated products is examined. The effect of panelists' demographics on bid values and auction winners, and the impact of experimental procedures on auction prices are analyzed. Demographic variables are poor predictors of bids and auction winners. Experimental procedures such as panel size and initial endowment influence market price level. Relative bid differences for paired samples are primarily influenced by relative differences in taste panel ratings. Relative willingness-to-pay values elicited through experimental auctions appear valid, while actual willingness-to-pay values are influenced by experimental design. Copyright 2004, Oxford University Press.

Suggested Citation

  • Wendy J. Umberger & Dillon M. Feuz, 2004. "The Usefulness of Experimental Auctions in Determining Consumers' Willingness-to-Pay for Quality-Differentiated Products," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 26(2), pages 170-185.
    • Handle: RePEc:oup:revage:v:26:y:2004:i:2:p:170-185
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/j.1467-9353.2004.00169.x
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dermot J. Hayes & Jason F. Shogren & Seung Youll Shin & James B. Kliebenstein, 1995. "Valuing Food Safety in Experimental Auction Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(1), pages 40-53.
    2. Coursey, Don L & Smith, Vernon L, 1984. " Experimental Tests of an Allocation Mechanism for Private, Public or Externality Goods," Scandinavian Journal of Economics, Wiley Blackwell, vol. 86(4), pages 468-484.
    3. Elizabeth Hoffman & Dale J. Menkhaus & Dipankar Chakravarti & Ray A. Field & Glen D. Whipple, 1993. "Using Laboratory Experimental Auctions in Marketing Research: A Case Study of New Packaging for Fresh Beef," Marketing Science, INFORMS, vol. 12(3), pages 318-338.
    4. David Lucking-Reiley & John A. List, 2000. "Demand Reduction in Multiunit Auctions: Evidence from a Sportscard Field Experiment," American Economic Review, American Economic Association, vol. 90(4), pages 961-972, September.
    5. Shogren, Jason F. & Seung Y. Shin & Dermot J. Hayes & James B. Kliebenstein, 1994. "Resolving Differences in Willingness to Pay and Willingness to Accept," American Economic Review, American Economic Association, vol. 84(1), pages 255-270, March.
    6. Alsemgeest, Paul & Noussair, Charles & Olson, Mark, 1998. "Experimental Comparisons of Auctions under Single- and Multi-Unit Demand," Economic Inquiry, Western Economic Association International, vol. 36(1), pages 87-97, January.
    7. Fox, John A. & Shogren, J. & Hayes, Dermot J. & Kliebenstein, James, 1995. "Experimental Auctions to Measure Willingness to Pay for Food Safety," Staff General Research Papers Archive 5343, Iowa State University, Department of Economics.
    8. Buhr, Brian L. & Hayes, Dermot J. & Shogren, Jason F. & Kliebenstein, James B., 1993. "Valuing Ambiguity: The Case Of Genetically Engineered Growth Enhancers," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(2), pages 1-10, December.
    9. List, John A, 2003. "Using Random nth Price Auctions to Value Non-market Goods and Services," Journal of Regulatory Economics, Springer, vol. 23(2), pages 193-205, March.
    10. Lusk, Jayson & Fox, John & Schroeder, Ted & Mintert, James & Koohmaraie, Mohammad, 1999. "Will Consumers Pay for Guaranteed Tender Steak?," Staff Papers 232530, Virginia Polytechnic Institute and State University, Department of Agricultural and Applied Economics.
    11. Jason F. Shogren & Dermot J. Hayes & James B. Kliebenstein & John A. Fox, 1994. "Bid Sensitivity and the Structure of the Vickrey Auction," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(5), pages 1089-1095.
    12. Friedman,Daniel & Sunder,Shyam, 1994. "Experimental Methods," Cambridge Books, Cambridge University Press, number 9780521456821.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chern, Wen S. & Kaneko, Naoya & Tarakcioglu, Gulay Babadogan, 2003. "Willingness to Pay for PEF-processed Orange Juice: Evidence from an Auction Experiment," 2003 Annual meeting, July 27-30, Montreal, Canada 21897, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Ty Feldkamp & Ted C. Schroeder, 2004. "Experimental Auction Procedure: Impact on Valuation of Quality Differentiated Goods," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 389-405.
    3. Umberger, Wendy J. & Feuz, Dillon M. & Calkins, Chris R. & Kllinger, Karen M., 2000. "The Value Of Beef Flavor: Consumer Willingness-To-Pay For Marbling In Beef Steaks," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36397, Western Agricultural Economics Association.
    4. Feuz, Dillon M. & Umberger, Wendy J. & Calkins, Chris R. & Killinger, Karen M., 2000. "Consumer Preference For Domestic Versus International Beef Steaks," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36385, Western Agricultural Economics Association.
    5. Maynard, Leigh J. & Hartell, Jason G. & Meyer, A. Lee & Hao, Jianqiang, 2004. "An experimental approach to valuing new differentiated products," Agricultural Economics, Blackwell, vol. 31(2-3), pages 317-325, December.
    6. Umberger, Wendy J. & Feuz, Dillon M. & Calkins, Chris R. & Killinger, Karen M., 2001. "Us Consumer Preference For Domestic Corn-Fed Versus International Grass-Fed Beef," 2001: International Trade in Livestock Products Symposium, January 2001, Auckland, New Zealand 14543, International Agricultural Trade Research Consortium.
    7. Tegene, Abebayehu & Huffman, Wallace E. & Rousu, Matthew C. & Shogren, Jason F., 2003. "The Effects Of Information On Consumer Demand For Biotech Foods: Evidence From Experimental Auctions," Technical Bulletins 33577, United States Department of Agriculture, Economic Research Service.
    8. Lusk, Jayson L. & Daniel, M. Scott & Mark, Darrell R. & Lusk, Christine L., 2001. "Alternative Calibration And Auction Institutions For Predicting Consumer Willingess To Pay For Nongenetically Modified Corn Chips," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(1), pages 1-18, July.
    9. Wendy J. Umberger & Dillon M. Feuz & Chris R. Calkins & Karen Killinger-Mann, 2002. "U.S. consumer preference and willingness-to-pay for domestic corn-fed beef versus international grass-fed beef measured through an experimental auction," Agribusiness, John Wiley & Sons, Ltd., vol. 18(4), pages 491-504.
    10. Kaneko, Naoya & Chern, Wen S., 2004. "Willingness To Pay For Non-Genetically Modified Food: Evidence Of Hypothetical Bias From An Auction Experiment In Japan," 2004 Annual meeting, August 1-4, Denver, CO 20305, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Menkhaus, Dale J., 2001. "Experimental Auctions: New Theoretical Developments And Empirical Findings - Discussion," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36112, Western Agricultural Economics Association.
    12. repec:ken:wpaper:0602 is not listed on IDEAS
    13. Hurley, Sean P. & Kliebenstein, James B., 1999. "The Potential For Marketing Pork Products With Embedded Environmental Attributes: Results From An Experimental Study," 1999 Annual meeting, August 8-11, Nashville, TN 21598, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. Huffman, Wallace & Rousu, M. & Shogren, Jason F. & Tegene, Abebayehu, 1009. "Are U.S. Consumers Tolerant of GM Foods?," Staff General Research Papers Archive 12336, Iowa State University, Department of Economics.
    15. Dragicevic, Arnaud Z. & Ettinger, David, 2011. "Private Valuation of a Public Good in Three Auction Mechanisms," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 2(2), pages 1-29, April.
    16. repec:ken:wpaper:0601 is not listed on IDEAS
    17. Koo, Cannon M., 1995. "Homegrown values in repeated auctions: the Vickrey auction versus the random N-th price auction," ISU General Staff Papers 1995010108000017612, Iowa State University, Department of Economics.
    18. Shogren, Jason F. & Cho, Sungwon & Koo, Cannon & List, John & Park, Changwon & Polo, Pablo & Wilhelmi, Robert, 2001. "Auction mechanisms and the measurement of WTP and WTA," Resource and Energy Economics, Elsevier, vol. 23(2), pages 97-109, April.
    19. Jayson L. Lusk & Darren Hudson, 2004. "Willingness-to-Pay Estimates and Their Relevance to Agribusiness Decision Making," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 26(2), pages 152-169.
    20. Brown, Jennifer & Cranfield, John A.L. & Henson, Spencer J., 2003. "Misassessed Risk In Consumer Valuation Of Food Safety: An Experimental Approach," 2003 Annual meeting, July 27-30, Montreal, Canada 22194, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    21. Huffman, Wallace E. & Shogren, Jason F. & Rousu, Matthew C. & Tegene, Abebayehu, 2003. "Consumer Willingness to Pay for Genetically Modified Food Labels in a Market with Diverse Information: Evidence from Experimental Auctions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(3), pages 1-22, December.
    22. Noussair, Charles & Robin, Stephane & Ruffieux, Bernard, 2004. "Revealing consumers' willingness-to-pay: A comparison of the BDM mechanism and the Vickrey auction," Journal of Economic Psychology, Elsevier, vol. 25(6), pages 725-741, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:revage:v:26:y:2004:i:2:p:170-185. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press or Christopher F. Baum (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.