IDEAS home Printed from https://ideas.repec.org/a/wly/ajagec/v86y2004i1p222-235.html

Negative Values in Vickrey Auctions

Author

Listed:
  • Gregory M. Parkhurst
  • Jason F. Shogren
  • 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 negativeinduced 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.

Suggested Citation

  • Gregory M. Parkhurst & Jason F. Shogren & David L. Dickinson, 2004. "Negative Values in Vickrey Auctions," American Journal of Agricultural Economics, John Wiley & Sons, vol. 86(1), pages 222-235, February.
    • Handle: RePEc:wly:ajagec:v:86:y:2004:i:1:p:222-235
    DOI: 10.1111/j.1467-8276.2004.tb18468.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-8276.2004.tb18468.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-8276.2004.tb18468.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Smith, Vernon L, 1982. "Microeconomic Systems as an Experimental Science," American Economic Review, American Economic Association, vol. 72(5), pages 923-955, December.
    2. Jason F. Shogren & John A. Fox & Dermot J. Hayes & Jutta Roosen, 1999. "Observed Choices for Food Safety in Retail, Survey, and Auction Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 1192-1199.
    3. Jerry Hausman, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    4. Viscusi, W Kip, 1997. "Alarmist Decisions with Divergent Risk Information," Economic Journal, Royal Economic Society, vol. 107(445), pages 1657-1670, November.
    5. 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.
    6. 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.
    7. Peter A. Diamond & Jerry A. Hausman, 1994. "Contingent Valuation: Is Some Number Better than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 45-64, Fall.
    8. W. Michael Hanemann, 1994. "Valuing the Environment through Contingent Valuation," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 19-43, Fall.
    9. 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.
    10. Fox, John A. & Hayes, Dermot J. & Kliebenstein, James & Shogren, Jason F., 1994. "Consumer Acceptability of Milk from Cows Treated with Bovine Somatotropin," Staff General Research Papers Archive 702, Iowa State University, Department of Economics.
    11. Fox, John A. & Buhr, Brian L. & Shogren, Jason F. & Kliebenstein, James B. & Hayes, Dermot J., 1995. "A Comparison of Preferences for Pork Sandwiches Produced from Animals With and Without Somatotropin Administration," ISU General Staff Papers 199504010800001009, Iowa State University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. repec:hal:pseose:halshs-00731244 is not listed on IDEAS
    3. 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(3), pages 1-16, December.
    4. 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.
    5. 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.
    6. Jayson Lusk & Tomas Nilsson & Ken Foster, 2007. "Public Preferences and Private Choices: Effect of Altruism and Free Riding on Demand for Environmentally Certified Pork," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 36(4), pages 499-521, April.
    7. 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.
    8. Drichoutis, Andreas & Lusk, Jayson & Nayga, Rodolfo, 2013. "The veil of experimental currency units," MPRA Paper 46906, University Library of Munich, Germany.
    9. Cerroni, S. & Watson, V. & Macdiarmid, J., 2018. "Preferences for healthy and environmentally sustainable food: Combining induced-value and home-grown experiments," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277155, International Association of Agricultural Economists.
    10. Qin, Botao, 2020. "Does a promise script work to reduce the hypothetical bias? Evidence from an induced value experiment," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 14, pages 1-15.
    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.
    13. 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.
    14. 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), pages 1-12, October.
    15. Ji Yong Lee & Doo Bong Han & Rodolfo M. Nayga Jr & Song Soo Lim, 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), pages 360-373, July.
    16. 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), pages 1-30, December.
    17. 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), pages 1-17, August.
    18. 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, vol. 8(2), pages 1-23.

    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. Shogren, Jason F., 2006. "Experimental Methods and Valuation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 19, pages 969-1027, Elsevier.
    2. repec:ken:wpaper:0601 is not listed on IDEAS
    3. Bodo Sturm & Joachim Weimann, 2006. "Experiments in Environmental Economics and Some Close Relatives," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 419-457, July.
    4. 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.
    5. Hurley, Sean P. & Kliebenstein, James B., 2003. "A Tale Of Two Premiums- Examining Bids From A Multiple Round Vickrey Auction With Differing Information Sets," 2003 Annual meeting, July 27-30, Montreal, Canada 22192, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Todd Cherry & Peter Frykblom & Jason Shogren & John List & Melonie Sullivan, 2004. "Laboratory Testbeds and Non-Market Valuation: The Case of Bidding Behavior in a Second-Price Auction with an Outside Option," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 29(3), pages 285-294, November.
    7. repec:ken:wpaper:0602 is not listed on IDEAS
    8. Hurley, Sean P. & Kliebenstein, James B., 2003. "Interpreting Bids From A Vickrey Auction When There Are Public Good Attributes," 2003 Annual meeting, July 27-30, Montreal, Canada 21965, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. 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).
    10. Smith, V. Kerry & Mansfield, Carol, 1998. "Buying Time: Real and Hypothetical Offers," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 209-224, November.
    11. Xue, Hong & Mainville, Denise Y. & You, Wen & Nayga, Rodolfo M., Jr., 2009. "Nutrition Knowledge, Sensory Characteristics and Consumers’ Willingness to Pay for Pasture-Fed Beef," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49277, Agricultural and Applied Economics Association.
    12. Bernard Ruffieux & Anne Rozan & Stéphane Robin, 2008. "Mesurer les préférences du consommateur pour orienter les décisions des pouvoirs publics : l'apport de la méthode expérimentale," Économie et Prévision, Programme National Persée, vol. 182(1), pages 113-127.
    13. Shogren, Jason F. & Margolis, Michael & Koo, Cannon & List, John A., 2001. "A random nth-price auction," Journal of Economic Behavior & Organization, Elsevier, vol. 46(4), pages 409-421, December.
    14. 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.
    15. Veisten, Knut, 2007. "Contingent valuation controversies: Philosophic debates about economic theory," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(2), pages 204-232, April.
    16. Frode Alfnes, 2007. "Willingness to Pay versus Expected Consumption Value in Vickrey Auctions for New Experience Goods," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 921-931.
    17. Timothy C. Haab & Matthew G. Interis & Daniel R. Petrolia & John C. Whitehead, 2013. "From Hopeless to Curious? Thoughts on Hausman's 'Dubious to Hopeless' Critique of Contingent Valuation," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 35(4), pages 593-612.
    18. Amoah, Anthony & Ferrini, Silvia & Schaafsma, Marije, 2019. "Electricity outages in Ghana: Are contingent valuation estimates valid?," Energy Policy, Elsevier, vol. 135(C).
    19. 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).
    20. 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.
    21. Fox, John Andrew, 1994. "Essays in the measurement of consumer preferences in experimental auction markets," ISU General Staff Papers 1994010108000012254, Iowa State University, Department of Economics.
    22. Hurley, Sean P. & Miller, Douglas J. & Kliebenstein, James B., 2004. "Estimating Willingness-To-Pay Using A Polychotomous Choice Function: An Application To Pork Products With Environmental Attributes," 2004 Annual meeting, August 1-4, Denver, CO 19924, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    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:wly:ajagec:v:86:y:2004:i:1:p:222-235. 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: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1467-8276 .

    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.