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Preference Learning in Consecutive Experimental Auctions

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  • Shogren, Jason F.
  • List, John
  • Hayes, Dermot J.

Abstract

This paper explores the origins of the strikingly high price premia paid for new food products in lab valuation exercises. Our experimental design distinguishes between two explanations of this phenomenon: novelty of the experimental experience versus the novelty of the good, i.e., preference learningï¾—bids reflect a personï¾’s desire to learn how an unfamiliar good fits into their preference set. Subjects bid in four consecutive experimental auctions for three goods that vary in familiarity, candy bars, mangos, and irradiated meat. Our results suggest that preference learning is the main source of the high premia, and that novelty of the experimental experience does not in itself artificially inflate valuations.

Suggested Citation

  • Shogren, Jason F. & List, John & Hayes, Dermot J., 2000. "Preference Learning in Consecutive Experimental Auctions," Staff General Research Papers Archive 5023, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:5023
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    1. 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.
    2. 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(2), pages 1-18, December.
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