Experimental Auctions: Methods and Applications in Economic and Marketing Research available in Hardcover, Paperback
Experimental Auctions: Methods and Applications in Economic and Marketing Research
- ISBN-10:
- 0521671248
- ISBN-13:
- 9780521671248
- Pub. Date:
- 11/08/2007
- Publisher:
- Cambridge University Press
- ISBN-10:
- 0521671248
- ISBN-13:
- 9780521671248
- Pub. Date:
- 11/08/2007
- Publisher:
- Cambridge University Press
Experimental Auctions: Methods and Applications in Economic and Marketing Research
Buy New
$53.99Buy Used
$33.56-
-
SHIP THIS ITEM
Temporarily Out of Stock Online
Please check back later for updated availability.
-
Overview
Product Details
| ISBN-13: | 9780521671248 |
|---|---|
| Publisher: | Cambridge University Press |
| Publication date: | 11/08/2007 |
| Series: | Quantitative Methods for Applied Economics and Business Research |
| Edition description: | New Edition |
| Pages: | 316 |
| Product dimensions: | 6.81(w) x 9.69(h) x 0.75(d) |
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.
Read an Excerpt
Cambridge University Press
9780521855167 - Experimental Auctions - Methods and Applications in Economic and Marketing Research - by Jayson L. Lusk and Jason F. Shogren
Excerpt
1 Introduction
1.1 Introduction
Our choices reflect our values. People reveal their relative values when they choose to spend an extra hour at work rather than at the opera; purchase more groceries rather than extra MP3s or drop extra change into a jar promoting a charity at the check-out line rather than buying a candy bar. Economists characterize the economic value of these choices by determining the rate at which a person is willing to trade one good or resource for another. This rate is captured in a person’s maximum willingness to pay to purchase a good or in their minimum willingness to accept to sell a good. Usually, these economic values are revealed within the context of an active exchange institution like a market or auction with numerous buyers and sellers. In such exchange institutions, buyers buy when their willingness to pay exceeds price and sellers sell when their willingness to accept falls below price.
But, how do people value new goods and services not currently bought and sold in the marketplace? These non-market goods and services include new private goods like cigarettes that have been genetically modified to possess less nicotine and diet cherry vanilla Cokewith lime as well as public goods like cleaner air in Santiago, Chile or biodiversity in Madagascar. No exchange institution exists for buyers and sellers to make bids and offers, which would reveal people’s relative values for these non-market goods. But there are policymakers and business managers who want information on the potential demand for these goods; they want to know if the perceived benefits from the products outweigh the costs to provide them.
Likewise, economists, psychologists, and marketers are also interested in eliciting people’s values for both market and non-market goods. Economists elicit values to conduct applied cost-benefit analysis related to public good provision, and to estimate the welfare effects of technological innovation and public policy (see e.g., Boardman et al., 2005). Psychologists and behavioral economists want to learn about people’s values to understand the degree to which decisions are consistent with preferences and beliefs and to offer refinements to economic theory. This work focuses on how people’s values can be influenced by the context of the decision and how people use rules of thumb to guide how they value goods (see Kahneman and Tversky, 2000). Marketing experts are interested in eliciting values to better understand consumer preferences, forecast new product success, and measure effectiveness of promotional activities, which in turn can help reduce the high failure rate of new products and the significant costs of advertising (see Wertenbroch and Skiera, 2002).
Over the last four decades, researchers have developed many value elicitation methods to tease out how people value various goods and services. These methods can be broadly categorized as revealed or stated preference methods (see Hanley et al., 2006 for an overview). Revealed preference methods use existing market data to derive implicit values for a good, for example hedonic pricing, travel costs. Revealed preferences work when the good already exists, albeit indirectly, in the market. For example, while a natural wonder such as the Grand Canyon cannot be directly bought and sold, we can observe how far people drive and what they give up in terms of opportunity cost of time to visit the Canyon. By detecting systematic patterns from these observations, one can indirectly determine people’s value for the park. Another example: the number of bathrooms in a house is not traded alone in the market; but by calculating the difference in the sales price of a two-bathroom home and the sales price of an otherwise identical one-bathroom home, we can indirectly determine people’s values for an extra bathroom. The upside of revealed preference methods is that real choices are examined. The downside of revealed preference methods is that valuation is indirect and must be inferred from empirical patterns.
In contrast, stated preference methods use public opinion surveys or comparative choice trials that ask a person, directly or indirectly, to state his or her value for the new good or service. The upside of stated preference methods is that the researcher can create a hypothetical market where a person can, in theory, buy or sell any good or service. The stated preference method is flexible enough to construct alternative potential scenarios such that demand for the good can be understood given changes in market and non-market conditions. A well known downside of stated preference methods, regardless of how well the survey is designed and executed, is that people know they are valuing a hypothetical change in the good or service. The absence of market discipline, which takes the form of budget constraints and availability of substitutes in the real world, creates an environment conducive to questionable responses. Values elicited from hypothetical surveys have exhibited many inconsistencies such as a lack of responsiveness to the scale and scope of proposed benefits and a tendency for people to promise to pay significantly more than they actually do when asked to shell out the money, (see Diamond and Hausmann, 1994 and Hanemann, 1994 for a discussion of the pros and cons of contingent valuation).
Traditional approaches used to elicit valuations suffer from several shortcomings. Revealed preference methods are indirect and require several simplifying assumptions to translate observed behavior into valuations. At worst, stated preference methods are open to strategic manipulation by the participant. At best, the method does not provide incentives for respondents to invest sufficient cognitive effort when thinking about their valuation decisions. What is needed is an approach that combines the advantages of revealed and stated preference methods – our world of experimental auctions.
1.2 Why experimental auctions?
Many stated preference methods involve people hypothetically rating, ranking, or choosing between competing products or alternatives. The implicit assumption is that people perceive no gain or loss from stating their preferences strategically or that people answer such hypothetical questions truthfully. To the extent people believe their responses are inconsequential, that is researchers will not use their responses to formulate public policy or business strategy, one response is as good as another from an economic standpoint because all responses have the same effect on a person’s level of utility. While people might try to answer a question sincerely, even if they believe their response to be inconsequential, standard economic models of individual decision making have nothing to say about inconsequential choices. Even under the maintained hypothesis of truthful responses, people have little incentive to expend cognitive effort on decisions involving hypothetical stated preferences making elicited values more “noisy” and systematically biased than they might otherwise be.
A more likely case is that people believe there is some chance that their responses are consequential and will be used by researchers to inform federal and business policy. In such cases, a person can benefit by offering non-truthful answers to survey questions in an attempt to influence the price, quality, and availability of future product offerings. When such incentives exist, mechanisms are needed to either align individuals’ incentives with the researcher’s or to impose some cost on people for offering responses that deviate from their true preferences. Over the past decade, evidence has accumulated indicating that people overstate the amount they are willing to pay when asked hypothetical valuation questions relative to when real money is on the line; stating values two to twenty times greater in hypothetical questions relative to non-hypothetical valuation questions (List and Gallet, 2001).
As a consequence, many applied economists have turned to experimental auctions to elicit consumer valuations for new goods and services (see Bohm, 1972; Brookshire and Coursey, 1987; Hoffman et al., 1993; Shogren et al., 1994; Lusk et al., 2001a). The advantage of experimental auctions over other value elicitation methods is that they put people in an active market environment where they can incorporate market feedback and where there are real economic consequences to stating preferences that differ from what they actually want. This is not to say that people cannot misrepresent their valuations in an experimental auction, only that so-called incentive compatible mechanisms help impose a price on people if they choose to send “signals” to researchers by bidding in a manner that deviates from their real value. In addition, researchers can also control and vary the amount of market-like feedback provided to bidders (e.g., posted market clearing prices, prices of outside options) to examine how robust their bidding behavior is to exogenous contextual changes in the auction environment.
Experimental auctions also address the non-market valuation challenge – when an experimental auction is held, a market is created (albeit a stylized one). In experimental auctions, bids are revealed preferences obtained in a real market with real products and real money. Experimental auctions use real money and real goods to create a market where people’s attention is focused on the valuation task. Experimental auctions have advantages over stated preference methods because an exchange mechanism (e.g., Vickrey’s second price auction) is used which creates incentives for people to think about what they will actually pay for the good or service. Experimental auctions have advantages over revealed preference methods because valuations for a good are directly obtained.
Further, experimental auctions provide a convenient way to determine each person’s willingness to pay. In an experimental auction, each person submits a bid that, in theory, is equal to their value for the good. This can be contrasted with most other value elicitation techniques, which rely on statistical models and assumptions about people’s utility functions to generate probability statements about valuations. For example, “best practices” in contingent valuation requires the use of a so-called single-bounded dichotomous choice question wherein a person states (yes or no) whether they are willing to pay a given amount for a good. All that can be surmised from such responses is whether willingness to pay is greater than or less than the given dollar amount. As shown by Hanemann (1984), assumptions must be made about the form of a representative utility function and the distribution of errors in the random utility model for the yes/no responses to be meaningfully used.
Other stated preference methods such as conjoint analysis require similar assumptions to arrive at valuations (see Louviere et al., 2000). While heterogeneity can be incorporated in discrete choice models by investigating how willingness to pay varies by measured demographics, experience has shown that such measures typically explain only a small percentage of variation in valuations. In addition, advances in econometric techniques, such as random parameter models, mixed logit models, and hierarchical Bayes models, permit one to derive individual-level valuations from discrete choice responses (see Allenby and Rossi, 1999; Huber and Train, 2001). Such approaches, however, require assumptions about a functional form for the utility function and assumptions about the joint distribution of preferences. Our point is that relative to other value elicitation techniques, experimental auctions provide the richest description of heterogeneity in valuations across people and goods with minimal assumptions.
This is a key point given the increasing recognition that economists need to better understand the degree of heterogeneity in valuations. Heckman (2001, p. 674) stated in his Nobel Lecture that “[t]he most important discovery was the evidence on the pervasiveness of heterogeneity and diversity in economic life. When a full analysis was made of heterogeneity in response, a variety of candidate averages emerged to describe the ‘average’ person, and the long-standing edifice of the representative consumer was shown to lack empirical support.” Identifying and understanding valuation heterogeneity is important for a number of reasons. First, market segmentation strategies rely on grouping individuals with similar preferences such that marketing efforts can be stylized for each segment. Experimental auctions can be used to understand how to group people based on revealed values. Second, to implement various models of price discrimination, businesses need accurate information on the distribution of valuations (see the vertical differentiation models such as that in Mussa and Rosen, 1978). Finally, properly characterizing heterogeneity is important to: determine, without bias, the welfare effects of public policy (see Graff Zivin, 2006; Giannakas and Fulton, 2002), identify whether firms practice anti-competitive behavior (see Berry et al., 1995; Nevo, 2001), and properly test economic theory which is formulated to hold, with the fewest assumptions, at the individual level (see Heckman, 2001; Lou, 2002).
1.3 What is an experimental auction?
Auction-type mechanisms were originally designed to elicit people’s values for monetary lotteries. The goal was to characterize individual preferences for risk taking or to investigate the empirical validity of expected utility theory (see Becker et al., 1964). This early work was largely overlooked until three decades ago when a few researchers like Peter Bohm, Jeff Bennett, David Brookshire, Don Coursey, Jack Knetsch, and Bill Schulze began revisiting the idea of using experimental auction methods to elicit values for real goods, especially the demand for environmental protection (see Cummings et al., 1986).
The approach developed out of the general experimental economics literature that had, for the most part, focused on induced value experiments in which people were given pre-assigned values for a fictitious good by the experimenter (see Smith, 1976, 1982 for discussions on induced value experiments in general and Coppinger et al., 1980 for induced value experiments with auctions in particular). In an induced value experiment, a person is paid earnings equal to the difference between their assigned induced value and the market price, given that a purchase is made. Induced value experiments are a powerful tool to test theory because elicited values can be directly compared with the induced value benchmark. This high level of experimental control, however, comes at a cost. By definition, induced value experiments are abstract, focusing on the allocative efficiency of the auction institution itself; these auctions do not provide information on people’s values for real-world goods and services.
In response, researchers started applying what they learned in induced value experiments to elicit people’s homegrown values: those values that people bring into an experiment for real-world goods. Initial applications used experimental auction-type mechanisms to elicit values for items such as public TV, sucrose octa-acetate (a bitter liquid people bid to avoid tasting), and coffee mugs to study the difference between willingness-to-accept and willingness-to-pay measures of value and to determine people’s values for public goods (see Bohm, 1972; Coursey, Hovis, and Schulze, 1987; Kahneman et al., 1990). The work of Hoffman et al. (1993) and Menkhaus et al. (1992) on the demand for vacuum-packed meats was perhaps the first to use experimental auctions for marketing purposes.
Today, experimental auctions are used around the world by applied economists, psychologists, and marketers interested in valuing new products and technologies and in investigating theoretical models of individual decision making, auctions, and valuation. The reader can explore Table 1.1 to get a better idea for how experimental auctions have been used over the last three decades. Table 1.1 chronologically lists over 100 experimental auction studies. The list helps illustrate the varied uses and expanding growth of experimental auctions used to elicit valuations. These auctions have been used for a wide variety of products. Applications range from valuing food safety (i.e., specific pathogens, biotechnology, pesticides, traceability, and growth hormones), food attributes (e.g., meat tenderness, meat color, fat content, and packaging), a variety of foods (e.g., kiwis, apples, chocolates, potatoes, corn chips, cookies, milk, and sandwiches), and a variety of non-food, high-value goods ranging from sports cards to firm business records to used cars to gasoline to Christmas gifts.
Table 1.1 also shows that experimental auctions have been conducted for a number of non-mutually exclusive reasons: to test theory, including investigations into the willingness-to-pay/willingness-to-accept divergence, studies of preference reversals, tests of the commitment cost theory, and so on, to study methods for valuing public and private goods, including investigations of hypothetical bias, scope effects, the willingness-to-pay/willingness-to-accept divergence, studies comparing mechanisms, studies of procedural issues, and so on, and to elicit homegrown preferences, including preferences for risk and time, and the demand for new goods and services.
When experimental auctions are used to elicit homegrown values, the researcher aims to balance control and context. Control means the researcher has control over the environment such that no unmeasured external force drives choices. That is, confounding of cause and effect is eliminated. What
Table 1.1 Examples of experimental auctions in action
| Year | Author(s) | Product(s) auctioned | Study purpose(s) | Location | Publication | ||
| 1 | 1964 | Becker, DeGroot, and Marschak | Lotteries | Estimate risk preferences | USA | Behavioural Science | |
| 2 | 1972 | Bohm | Public television show | Study methods for valuing public goods | Sweden | European Economic Review | |
| 3 | 1979 | Grether and Plott | Lotteries | Study preference reversal phenomenon | USA | American Economic Review | |
| 4 | 1983 | Bennett | Movie | Study contributions to a public good | Australia | Economic Analysis and Policy | |
| 5 | 1984 | Bohm | Bus route | Study methods for valuing public goods | Sweden | Public Finance and the Quest for Efficiency | |
| 6 | 1986 | Cummings, et al. | Sucrose octa-acetate (a bitter tasting liquid), public goods | Study methods for valuing public goods | USA | Valuing Environmental Goods: An Assessment of the CVM | |
| 7 | 1987 | Brookshire and Coursey | Tree density in a park | Study methods for valuing public goods | USA | American Economic Review | |
| 8 | 1987 | Brookshire et al. | Strawberries | Study external validity of experimental auctions | USA | Economic Inquiry | |
| 9 | 1987 | Coursey et al. | Sucrose octa-acetate (a bitter tasting liquid) | Study WTP/WTA divergence | USA | Quarterly Journal of Economics | |
| 10 | 1988 | Loewenstein | Delayed cash payment | Estimate time preferences | USA | Management Science | |
| 11 | 1989 | Harless | Lotteries | Study WTP/WTA divergence | USA | Journal of Economic Behavior and Organization | |
| 12 | 1990 | Kahneman, Knetsch, and Thaler | Coffee mugs | Study WTP/WTA divergence | USA | Journal of Political Economy | |
| 13 | 1990 | Shogren | Protection and insurance against monetary loss | Study risk reduction mechanisms | USA | Journal of Risk and Uncertainty | |
| 14 | 1991 | Crocker and Shogren | Lotteries | Study preference learning | USA | Environmental Policy and the Economy | |
| 15 | 1992 | Boyce et al. | Life of small pine tree | Study WTP/WTA divergence | USA | American Economic Review | |
| 16 | 1992 | Kachelmeier and Shehata | Lotteries | Study WTP/WTA divergence; estimate risk preferences | China | American Economic Review | |
| 17 | 1992 | Menkhaus et al. | Beef steaks | Estimate determinants of value for vacuum packaging | USA | Journal of Agricultural and Resource Economics | |
| 18 | 1993 | Buhr et al. | Pork sandwich | Value growth hormones and marbling | USA | Journal of Agricultural and Resource Economics | |
| 19 | 1993 | Hoffman et al. | Beef steaks | Study procedural issues; value vacuum packaging | USA | Marketing Science | |
| 20 | 1993 | McClelland et al. | Insurance to avoid loss | Study risk preferences; study hypothetical bias | USA | Journal of Risk and Uncertainty | |
| 21 | 1994 | Bohm | Used cars | Study preference reversal phenomenon | Sweden | Empirical Economics | |
| 22 | 1994 | Fox et al. | Milk | Value growth hormones | USA | Journal of Dairy Science | |
| 23 | 1994 | Shogren and Crocker | Protection and insurance against monetary loss | Study preferences for timing of risk reduction | USA | Economics Letters | |
| 24 | 1994 | Shogren et al. | Candy bars, pork sandwiches | Study WTP/WTA divergence | USA | American Economic Review | |
| 25 | 1995 | Fox et al. | Pork sandwiches | Value growth hormones | USA | Journal of Animal Science | |
| 26 | 1995 | Hayes et al. | Pork sandwiches | Value food safety | USA | American Journal of Agricultural Economics | |
| 27 | 1996 | Di Mauro and Maffioletti | Protection and insurance against monetary loss | Study preferences for ambiguity | Italy | Journal of Risk and Uncertainty | |
| 28 | 1996 | Melton et al. | Pork chops | Value meat color, marbling, size, and tenderness | USA | American Journal of Agricultural Economics | |
| 29 | 1997 | Bateman et al. | Gourmet chocolates, soft drink | Study WTP/WTA divergence | UK | Quarterly Journal of Economics | |
| 30 | 1997 | Bohm et al. | 30 liters of gasoline | Study procedural issues; compare mechanisms | Sweden | Economic Journal | |
| 31 | 1997 | Frykblom | Atlas | Study hypothetical bias | Sweden | Journal of Environmental Economics and Management | |
| 32 | 1997 | Kirby | Delayed cash payment | Estimate time preferences | USA | Journal of Experimental Psychology: General | |
| 33 | 1998 | List and Shogren | Sports cards | Study hypothetical bias | USA | Journal of Economic Behavior and Organization | |
| 34 | 1998 | List and Shogren | Various Christmas gifts | Estimate deadweight loss of Christmas | USA | American Economic Review | |
| 35 | 1998 | List et al. | Sports cards | Study hypothetical bias | USA | Economics Letters | |
| 36 | 1998 | Roosen et al. | Apples | Value pesticide use | USA | Journal of Agricultural and Resource Economics | |
| 37 | 1998 | Rutstrm | Gourmet chocolates | Compare mechanisms | USA | International Journal of Game Theory | |
| 38 | 1998 | Fox et al. | Pork sandwiches | Study hypothetical bias | USA | American Journal of Agricultural Economics | |
| 39 | 1999 | List and Shogren | Candy bars, pork sandwiches | Study effect of price feedback on bids | USA | American Journal of Agricultural Economics | |
| 40 | 1999 | Lucking-Reiley | Trading cards | Compare mechanisms in on-line auctions | USA | American Economic Review | |
| 41 | 2000 | Frykblom and Shogren | Atlas | Study methods for valuing public goods | Sweden | Environmental and Resource Economics | |
| 42 | 2000 | Horowitz and McConnell | Binoculars, coffee mugs, flashlights | Study hypothetical bias; study performance of mechanism | USA | Journal of Economic Behavior and Organization | |
| 43 | 2000 | List and Lucking-Reiley | Sports cards | Compare mechanisms | USA | American Economic Review | |
| 44 | 2000 | Shogren, List, and Hayes | Candy bars, mangos, pork sandwiches | Test for preference learning vs. experimental novelty | USA | American Journal of Agricultural Economics | |
| 45 | 2001 | Balistreri et al. | Lotteries | Study hypothetical bias | USA | Environmental and Resource Economics | |
| 46 | 2001 | Knetch et al. | Coffee mugs | Study WTP/WTA divergence | Canada, Singapore | Experimental Economics | |
| 47 | 2001 | List | Sports cards | Study methods for valuing public goods | USA | American Economic Review | |
| 48 | 2001 | Lusk et al. | Beef steaks | Value tenderness | USA | American Journal of Agricultural Economics | |
| 49 | 2001 | Lusk et al. | Corn chips | Value genetically modified food | USA | Journal of Agricultural and Resource Economics | |
| 50 | 2001 | Shogren et al. | Candy bars, coffee mugs | Study WTP/WTA divergence | USA | Resource and Energy Economics | |
| 51 | 2002 | Dickinson and Bailey | Beef sandwiches, pork sandwiches | Value traceability, food safety, production methods | USA | Journal of Agricultural and Resource Economics | |
| 52 | 2002 | Fox et al. | Pork sandwiches | Study effect of information about irradiation | USA | Journal of Risk and Uncertainty | |
| 53 | 2002 | Huck and Weizäcker | Contracts tied to other people’s choices | Study people’s ability to predict others’ preferences | Germany | Journal of Economic Behavior and Organization | |
| 54 | 2002 | Lange et al. | Champagne | Study performance of mechanism | France | Food Quality and Preference | |
| 55 | 2002 | List | Sports cards | Study preference reversal phenomenon | USA | American Economic Review | |
| 56 | 2002 | Masters and Sanogo | Infant foods | Estimate welfare effects of quality certification | Mali | American Journal of Agricultural Economics | |
| 57 | 2002 | Noussair, Robin, and Ruffieux | Corn flakes | Study effects of labels on genetically modified food | France | Economics Letters | |
| 58 | 2002 | Soler and Sanchez | Vegetables | Value organic and eco labels | Spain | British Food Journal | |
| 59 | 2002 | Umberger et al. | Beef steaks | Value corn fed vs. grass fed beef | USA | Agribusiness | |
| 60 | 2002 | Wertenbroch and Skiera | Cake, pen, soft drink | Study performance of mechanism | Germany, USA | Journal of Marketing Research | |
| 61 | 2003 | Alfnes and Rickertsen | Beef steaks | Value growth hormones and country of origin | Norway | American Journal of Agricultural Economics | |
| 62 | 2003 | Areily, Loewenstein, and Prelec | Annoying sounds, keyboard, wine | Test theory of coherent arbitrariness | USA | Quarterly Journal of Economics | |
| 63 | 2003 | Cherry, Crocker, and Shogren | Monetary and wildlife lotteries | Study preference reversals | USA | Journal of Environmental Economics and Management | |
| 64 | 2003 | Hong and Nishimura | Lotteries | Compare mechanisms; study mechanism performance | USA | Journal of Economic Behavior and Organization | |
| 65 | 2003 | Huffman et al. | Corn chips, potatoes, vegetable oil | Value genetically modified food | USA | Journal of Agricultural and Resource Economics | |
| 66 | 2003 | List | Sports cards | Study WTP/WTA divergence | USA | Quarterly Journal of Economics | |
| 67 | 2003 | Loureiro, Umberger, and Hine | Cookies | Study procedural issues | USA | Applied Economics Letters | |
| 68 | 2003 | Lusk | Coffee mug, lotteries | Test commitment cost theory | USA | American Journal of Agricultural Economics | |
| 69 | 2003 | Stoneham, Chaudhri, and Strappazzon | Land conservation contracts | Value biodiversity and conservation; test-bed mechanism | Australia | Australian Journal of Agricultural and Resource Economics | |
| 70 | 2003 | Umberger et al. | Beef steaks | Value country of origin | USA | Journal of Food Distribution Research | |
| 71 | 2004 | Blondel and Javaheri | Apples, wine | Value organic food | France | Acta Horticulturae | |
| 72 | 2004 | Carpenter, Holmes, and Matthews | Over 20 items including DVD players, gift certificates, and toys | Compare mechanisms in charity auctions | USA | IZA Discussion Paper | |
| 73 | 2004 | Cummings, Holt, and Laury | Water permits | Value irrigation rights | USA | Journal of Policy Analysis and Modeling | |
| 74 | 2004 | Feuz et al. | Beef steaks | Value tenderness and flavor | USA | Journal of Agricultural and Resource Economics | |
| 75 | 2004 | Hofler and List | Sports cards | Study hypothetical bias | USA | American Journal of Agricultural Economics | |
| 76 | 2004 | Killinger et al. | Beef steaks | Value color, marbling, and origin | USA | Journal of Animal Science | |
| 77 | 2004 | List | Sports cards | Study discrimination | USA | Quarterly Journal of Economics | |
| 78 | 2004 | Lunander and Nilsson | Contracts for road painting | Study mechanism; test-bed mechanism | Sweden | Journal of Regulatory Economics | |
| 79 | 2004 | Lusk et al. | Beef steaks | Value meat quality; compare mechanisms; test for endowment effects | USA | American Journal of Agricultural Economics | |
| 80 | 2004 | Lusk et al. | Cookies | Study effect of information about biotechnology | France, UK, USA | European Review of Agricultural Economics | |
| 81 | 2004 | Nalley et al. | Sweet potatoes | Value taste, origin, and health | USA | Mississippi State University | |
| 82 | 2004 | Noussair et al. | Biscuits | Value genetically modified food; investigate effect of tolerance levels | France | Economic Journal | |
| 83 | 2004 | Noussair et al. | Candy bars, cookies, orange juice | Study performance of mechanism | France | Food Quality and Preference | |
| 84 | 2004a | Rousu et al. | Corn chips, potatoes, vegetable oil | Study effect of genetically modified food tolerance limits | USA | Review of Agricultural Economics | |
| 85 | 2004b | Rousu et al. | Corn chips, potatoes, vegetable oil | Value conflicting information on genetically modified food | USA | Land Economics | |
| 86 | 2004 | Rozan et al. | Apples, bread, potatoes | Value metal content; compare mechanisms | France | European Review of Agricultural Economics | |
| 87 | 2004 | Umberger and Feuz | Beef steaks | Study performance of mechanism | USA | Review of Agricultural Economics | |
| 88 | 2005 | Ackert et al. | Mugs | Study WTP/WTA divergence | USA | Federal Reserve Bank of Atlanta | |
| 89 | 2005 | Berg et al. | Lotteries | Estimate risk preferences; compare mechanisms | USA | Proceedings of the National Academy of Sciences | |
| 90 | 2005 | Bernard | Chocolates | Study effect of price feedback on bids; value organic food | USA | Applied Economics Letters | |
| 91 | 2005 | Bernard and Schulze | MP3 player | Study how people forecast future values | USA | Economics Bulletin | |
| 92 | 2005 | Brown et al. | Chicken sandwich | Value food safety | Canada | Canadian Journal of Agricultural Economics | |
| 93 | 2005 | Corrigan | Coffee mug | Test commitment cost theory | USA | Environmental and Resource Economics | |
| 94 | 2005 | Dickinson and Bailey | Beef sandwiches, pork sandwiches | Value traceability, food safety, production methods | Canada, Japan, UK, USA | Journal of Agricultural and Applied Economics | |
| 95 | 2005 | Ding et al. | Chinese food meals | Study performance of mechanism | USA | Journal of Marketing Research | |
| 96 | 2005 | Hobbs et al. | Beef sandwiches, pork sandwiches | Value traceability, food safety, production methods | Canada | Canadian Journal of Agricultural Economics | |
| 97 | 2005 | Hudson, Coble, and Lusk | Lotteries | Estimate risk preferences | USA | Agricultural Economics | |
| 98 | 2005 | Jaeger and Harker | Kiwi fruit | Value new kiwi variety; value genetically modified food | New Zealand | Journal of the Science of Food and Agriculture | |
| 99 | 2005 | Kassardjian et al. | Apples | Value genetically modified food | New Zealand | British Food Journal | |
| 100 | 2005 | Lusk et al. | Cookies | Estimate welfare effects of biotechnology policies | France, UK, USA | Economics Letters | |
| 101 | 2005 | Platter et al. | Beef steaks | Value meat color, marbling, size, and tenderness | USA | Journal of Animal Science | |
| 102 | 2005 | Plott and Zeiler | Lotteries and mugs | Study WTP/WTA divergence | USA | American Economic Review | |
| 103 | 2005 | Rousu et al. | Cigarettes | Value genetically modified cigarettes with quality improvement | USA | Journal of Agricultural and Applied Economics | |
| 104 | 2006 | Cherry and Shogren | Lotteries | Study preferences with market-like arbitrate | USA | Journal of Economic Psychology | |
| 105 | 2006 | Corrigan and Rousu | Corn chips, salsa | Test for endowment effects | USA | American Journal of Agricultural Economics | |
| 106 | 2006 | Corrigan and Rousu | Candy bars, coffee mugs | Study effect of price feedback on bids | USA | American Journal of Agricultural Economics | |
| 107 | 2006 | Eigenraam et al. | Land conservation contracts | Value biodiversity and conservation; test-bed mechanism | Australia | Department of Primary Industries | |
| 108 | 2006 | Hobbs, Sanderson, and Haghiri | Bison meat sandwich, beef sandwich | Value bison meat; value health information | Canada | Canadian Journal of Agricultural Economics | |
| 109 | 2006 | Lusk et al. | Cookies | Value genetically modified food | France, UK, USA | Agricultural Economics | |
| 110 | 2006 | Marcellino | Business records | Value farm records | USA | Purdue University | |
| 111 | 2006 | Marette et al. | Fish | Value omega 3 fatty acid and metal content | France | Iowa State University | |
| 112 | 2006 | Norwood and Lusk | Soft drinks | Test theory of excessive choice effect | USA | Oklahoma State University | |
| 113 | 2006 | Shaw, Nayga, and Silva | Cookie | Value information on health risk | USA | Economics Bulletin |
| Image not available in HTML version |
Figure 1.1 Experimental auctions as a balance of control and context
separates an experimental auction from other auctions is the attention given to control. Context implies that subjects have some contextual cues about why their decision might matter in a bigger world. Figure 1.1 shows several research methods that vary along the control/context spectrum. At one extreme are non-experimental data obtained from actual market transactions. Such data are valuable in the sense that they have high face validity (i.e., data are obviously useful in addressing the question at hand) and represent actual behavior of people in the markets our models attempt to emulate. The weakness of non-experimental data is that they come in aggregated form and, most problematic, it is a challenge to identify causality due to endogeneity and measurement error. At the other extreme are induced value experiments. Induced value experiments provide the control needed in non-experimental data: researchers control the market institution, the rules of exchange, the supply and demand schedules, and the level and extent of repetition and information. The problem, however, is that induced value experiments are abstract settings with little parallel to decisions in the wilds. They (purposefully) involve people making decisions devoid of natural context, that is buying and selling a redeemable token as opposed to a 1948 Gibson L-50 archtop guitar. Such an approach can create more powerful tests of treatment effects and some theoretical models. But to the extent that valuations, behavior, and constraints are context-specific, experimental data based on abstract monetary choices may bear little relation to actual choices in everyday life.© Cambridge University Press