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Willingness To Pay Versus Expected Consumption Value In Vickrey Auctions For New Experience Goods

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  • Alfnes, Frode

Abstract

Vickrey auctions are commonly used to elicit willingness to pay for new food products. This paper shows that in a multi-period context, it can be optimal to bid higher than the expected consumption value for new experience goods to obtain information about the quality of the goods. The degree of value uncertainty, the purchasing frequency, and expected future market prices affect both the expected value of the quality information and the weakly dominant bidding strategy in Vickrey auctions for new experience goods. Keywords: experience goods, value of information, Vickrey auctions.

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  • Alfnes, Frode, 2006. "Willingness To Pay Versus Expected Consumption Value In Vickrey Auctions For New Experience Goods," 2006 Annual meeting, July 23-26, Long Beach, CA 21211, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea06:21211
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    12. Charles Noussair & St√ąphane Robin & Bernard Ruffieux, 2004. "Do Consumers Really Refuse To Buy Genetically Modified Food?," Economic Journal, Royal Economic Society, vol. 114(492), pages 102-120, January.
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    Cited by:

    1. 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(01), pages 35-52, February.
    2. Jay R. Corrigan & Dinah Pura T. Depositario & Rodolfo M. Nayga & Ximing Wu & Tiffany P. Laude, 2006. "Comparing Open-Ended Choice Experiments and Experimental Auctions: An Application to Golden Rice," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 837-853.
    3. 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.
    4. Katherine P. Adams & Travis J. Lybbert & Stephen A. Vosti & Emmanuel Ayifah, 2016. "Using an economic experiment to estimate willingness-to-pay for a new maternal nutrient supplement in Ghana," Agricultural Economics, International Association of Agricultural Economists, vol. 47(5), pages 581-595, September.
    5. repec:bla:jageco:v:68:y:2017:i:1:p:123-142 is not listed on IDEAS

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