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Experimental auction procedure: Impact on valuation of quality differentiated goods

  • Jayson Lusk
  • Ted Schroeder
  • Ty Feldkamp

Despite increased use of experimental auctions, a myriad of different procedures are being employed without formal consideration of how the procedures might affect results. The study investigates the effect of several procedural issues on valuation estimates from experimental auctions. Results indicate the second price auction generates higher valuations than English, Becker-DeGroot-Marschak (BDM), and random nth price auctions, especially in latter bidding rounds, and that random nth price auction yields lower valuations than English and BDM auctions. We find that endowing subjects with a good prior to eliciting bids can have an impact on valuationsk, but the effect varies across auction mechanism.

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Paper provided by The Field Experiments Website in its series Artefactual Field Experiments with number 00097.

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Date of creation: 2004
Date of revision:
Handle: RePEc:feb:artefa:00097
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  1. Jason Shogren & John List, 1998. "Calibration of the difference between actual and hypothetical valuations in a field experiment," Natural Field Experiments 00296, The Field Experiments Website.
  2. Fox, John A. & Shogren, J. & Hayes, Dermot J. & Kliebenstein, James, 2003. "Cvm-X: Calibrating Contingent Values with Experimental Auction Markets," Staff General Research Papers 11935, Iowa State University, Department of Economics.
  3. repec:feb:framed:0068 is not listed on IDEAS
  4. John A. List & Jason F. Shogren, 1999. "Price Information and Bidding Behavior in Repeated Second-Price Auctions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 942-949.
  5. 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.
  6. Roosen, Jutta & Fox, John A. & Hennessy, David A. & Schreiber, Alan, 1998. "Consumers' Valuation Of Insecticide Use Restrictions: An Application To Apples," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(02), December.
  7. Hayes, Dermot J. & Shogren, Jason F. & Shin, Seung Youll & Kliebenstein, James, 1995. "Valuing Food Safety in Experimental Auction Markets," Staff General Research Papers 835, Iowa State University, Department of Economics.
  8. Jack Knetsch & Fang-Fang Tang & Richard Thaler, 2001. "The Endowment Effect and Repeated Market Trials: Is the Vickrey Auction Demand Revealing?," Experimental Economics, Springer, vol. 4(3), pages 257-269, December.
  9. Lusk, Jayson L. & Roosen, Jutta & Fox, John A., 2001. "Demand For Beef From Cattle Administered Growth Hormones Or Fed Genetically Modified Corn: A Comparison Of Consumers In France, Germany, The United Kingdom, And The United States," 2001 Annual meeting, August 5-8, Chicago, IL 20684, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  10. 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.
  11. Jason F. Shogren & John A. List & Dermot J. Hayes, 2000. "Preference Learning in Consecutive Experimental Auctions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 1016-1021.
  12. Simonson, Itamar, 1989. " Choice Based on Reasons: The Case of Attraction and Compromise Effects," Journal of Consumer Research, University of Chicago Press, vol. 16(2), pages 158-74, September.
  13. Jason F. Shogren & John A. Fox, 1996. "Consumer Preferences for Fresh Food Items with Multiple Quality Attributes: Evidence from an Experimental Auction of Pork Chops," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 916-923.
  14. John A. List, 2002. "Preference Reversals of a Different Kind: The "More Is Less" Phenomenon," American Economic Review, American Economic Association, vol. 92(5), pages 1636-1643, December.
  15. Shogren, Jason F. & Fox, John A. & Hayes, Dermot J. & Kliebenstein, James, 1994. "Bid Sensitivity in the Structure of the Vickrey Auction," Staff General Research Papers 10616, Iowa State University, Department of Economics.
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