Experimental Auctions: Methods and Applications in Economic and Marketing Research

Experimental Auctions: Methods and Applications in Economic and Marketing Research

by Jayson L. Lusk, Jason F. Shogren, Jayson Lusk
     
 

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ISBN-10: 0521855160

ISBN-13: 9780521855167

Pub. Date: 08/31/2007

Publisher: Cambridge University Press

Economists, psychologists, and marketers are interested in determining the monetary value people place on non-market goods for a variety of reasons: to carry out cost-benefit analysis, to determine the welfare effects of technological innovation or public policy, to forecast new product success, and to understand individual and consumer behavior. Unfortunately, many

Overview

Economists, psychologists, and marketers are interested in determining the monetary value people place on non-market goods for a variety of reasons: to carry out cost-benefit analysis, to determine the welfare effects of technological innovation or public policy, to forecast new product success, and to understand individual and consumer behavior. Unfortunately, many currently available techniques for eliciting individuals' values suffer from a serious problem in that they involve asking individuals hypothetical questions about intended behavior. Experimental auctions circumvent this problem because they involve individuals exchanging real money for real goods in an active market. This represents a promising means for eliciting non-market values. Lusk and Shogren provide a comprehensive guide to the theory and practice of experimental auctions. It will be a valuable resource for graduate students, practitioners, and researchers concerned with the design and utilization of experimental auctions in applied economic and marketing research.

About the Author:
Jayson L. Lusk is Professor and Willard Sparks Endowed Chair in the Department of Agricultural Economics, Oklahoma State University

About the Author:
Jason F. Shogren is Stroock Distinguished Professor of Natural Resource Conservation and Management, and Professor of Economics and Finance, University of Wyoming

Product Details

ISBN-13:
9780521855167
Publisher:
Cambridge University Press
Publication date:
08/31/2007
Series:
Quantitative Methods for Applied Economics and Business Research Series
Pages:
316
Product dimensions:
7.00(w) x 9.80(h) x 0.90(d)

Table of Contents

List of figures     ix
List of tables     x
Introduction     1
Introduction     1
Why experimental auctions?     3
What is an experimental auction?     5
Purpose of this book and boundaries of coverage     17
Incentive compatible auctions: theory and evidence     19
Introduction     19
Theory of incentive compatible auctions     20
Evidence from induced value auctions     27
Value theory     34
Introduction     34
Valuation under certainty     34
Valuation under uncertainty     37
Valuation in a dynamic environment with uncertainty, limited information, and irreversibility     43
Summary     44
Conducting experimental auctions: some preliminaries     46
Introduction     46
Experimental design     47
Sample size determination     55
Experiment setting and context: field versus laboratory     57
Conclusions     61
Conducting experimental auctions     62
Introduction     62
Training and practice     62
Endowment versus full bidding     65
Choosing anauction mechanism     69
Multiple good valuation, demand reduction, and field substitutes     76
Learning and affiliation in repeated bidding rounds     80
Negative values     92
Conclusions     94
Data analysis     95
Introduction     95
Censored regressions with auction bids     95
Quantile regression with auction bids     100
Panel data regression with auction bids     103
Other types of data analysis with auction bids     106
Conclusions     112
Valuation case studies     113
Introduction     113
Informing Policy I: beef tenderness grading system     113
Informing Policy II: valuing safer food     121
Informing Policy III: tolerance for genetically modified food     129
Marketing I: forecasting market share of a new product     137
Marketing II: preferences for fresh food with multiple quality attributes     141
Marketing III: the value of farm financial records     149
Controversial goods I: demand for genetically modified food in three countries     154
Controversial goods II: irradiation     163
Controversial goods III: food from animals treated with growth hormones      169
Concluding comments     174
Appendices     175
Auction design: case studies     196
Introduction     196
Preference learning     196
Willingness to pay, willingness to accept, and the auction mechanism     199
Second price auction tournaments     209
Preferences: fixed or fungible?     217
Gift exchange     225
Calibration of real and hypothetical auction bids     229
Hybrid auctions and consequential bidding     239
Concluding remarks     245
Validity of experimental auctions     247
Introduction     247
Auction bids and economic theory     248
Reliability     252
Convergent validity     255
Anomalies     261
Summary     267
The future of experimental auctions     269
Introduction     269
Ten questions worthy of future research     270
Concluding remarks     278
References     279
Index     297

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