Experimental Auctions: Methods and Applications in Economic and Marketing Research

by Jayson L. Lusk , Jason F. Shogren

• ISBN13: 9780521855167
• ISBN10: 0521855160
• Format: Hardcover
• Copyright: 2008-01-14
• Publisher: Cambridge University Press

Summary

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 to graduate students, practitioners and researchers concerned with the design and utilization of experimental auctions in applied economic and marketing research.

Author Biography

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

Table of Contents

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