AJAE Appendix: Willingness to Pay Versus Expected Consumption Value in Vickrey Auctions for New Experience Goods

The material contained herein is supplementary to the article named in the title and published in the American Journal of Agricultural Economics, Volume 89, Number 4, November 2007.Demand and Price Analysis,

WILLINGNESS TO PAY VERSUS EXPECTED CONSUMPTION VALUE IN VICKREY AUCTIONS FOR NEW EXPERIENCE GOODS

Vickrey auctions are commonly used to elicit willingness to pay for new food products. This paper shows that in a multi-period context, it can be optimal to bid higher than the expected consumption value for new experience goods to obtain information about the quality of the goods. The degree of value uncertainty, the purchasing frequency, and expected future market prices affect both the expected value of the quality information and the weakly dominant bidding strategy in Vickrey auctions for new experience goods. Keywords: experience goods, value of information, Vickrey auctions.experience goods, value of information, Vickrey auctions., Consumer/Household Economics,

Consumer preferences for organic and welfare labbeled meat: A natural field experiment conducted in a high class restaurant.

This paper describes a natural field experiment conducted at a high-class restaurant. We discuss some of the challenges of incorporating a state of the art choice experiment in the daily running of the restaurant without affecting the customers’ restaurant experience. The case we explore is how credence attributes like organic and animal welfare affects real customer choices in the restaurant

SC-X: CALIBRATING STATED CHOICE SURVEYS WITH EXPERIMENTAL AUCTION MARKETS

Experimental auctions (X) use real economic incentives but are limited by available products and locally recruited samples. Stated choice (SC) surveys can use a representative sample to estimate the willingness to pay (WTP) for hypothetical products with unavailable characteristics. However, a number of studies conclude that surveys give biased WTP estimates. We designed a method, SC-X, to calibrate the WTP estimates from stated choice surveys with WTP observed in experimental auctions. This method allows us to extend the results from auctions to products with unavailable characteristics and to socioeconomic groups not included in the auction. The SC-X method is illustrated using Norwegian consumers' preferences for country-of-origin and hormone status for beef.Institutional and Behavioral Economics, Marketing,

SC-X: CALIBRATING STATED CHOICE SURVEYS WITH EXPERIMENTAL AUCTION MARKETS

Experimental auctions (X) use real economic incentives but are limited by available products and locally recruited samples. Stated choice (SC) surveys can use a representative sample to estimate the willingness to pay (WTP) for hypothetical products with unavailable characteristics. However, a number of studies conclude that surveys give biased WTP estimates. We designed a method, SC-X, to calibrate the WTP estimates from stated choice surveys with WTP observed in experimental auctions. This method allows us to extend the results from auctions to products with unavailable characteristics and to socioeconomic groups not included in the auction. The SC-X method is illustrated using Norwegian consumers' preferences for country-of-origin and hormone status for beef.Agribusiness,

None-of-These Bias in Stated Choice Experiments

We conduct a within-sample test of hypothetical bias and parameter equality between a hypothetical stated choice (SC) experiment using pictures and a real choice (RC) experiments using products. With exception of the none-of-these alternative-specific dummy, we cannot reject parameter equality between the two datasets. However, when we estimate the models separately with no parameter restrictions, the SC experiment gave WTP estimates that were approximately 50 percent higher and marginal WTP estimates that were almost two times as high as the corresponding estimates from the RC experiment. However, even though the monetary value of the WTP disparity was large, the disparity between the WTP estimates from the two data sets was not statistically significant.choice experiment, hypothetical bias, color, mixed logit, salmon, willingness to pay, Consumer/Household Economics, C81, C93, D12, Q22,

Experimental Evidence of Risk Aversion in Consumer Markets: The Case of Beef Tenderness

We use an experimental auction market to investigate how inconsistency in tenderness affects consumers' WTP for beef. We find that both the level and the spread of tenderness affect consumers' WTP. Categorization the beef into various classes of tenderness increased the total value of the beef by 8%.Consumer/Household Economics,

The Effect of Color on Consumer WTP for Farmed Salmon

Atlantic salmon is recognized for its pink-red color. The color is due to deposition of color pigments in the muscles. Wild salmon absorb the pink-red color pigment astaxanthin from the crustaceans they eat. To impart the pink-red color in farmed salmon, synthetically produced astaxanthin is added to their feed. The more astaxanthin, the redder the flesh becomes. In conventional salmon farming, the relatively expensive astaxanthin constitutes approximately 15% of the total feed costs. In this study, we use a stated choice experiment with pictures to investigate consumer willingness to pay (WTP) for salmon with different degrees of redness. The results show that consumer WTP increases with the redness of the salmon. However, when consumers were informed about the origin of the color, the WTP for the above-normal-red salmon was reduced.choice experiment, color, mixed logit, salmon, WTP, Resource /Energy Economics and Policy, Q13, Q22,

Experimental Evidence of Risk Aversion in Consumer Markets: The Case of Beef Tenderness

Consistency of quality is important for brand loyalty and market share in consumer markets. Among consumers of beef, tenderness is the primary quality attribute. We use an experimental auction market to investigate how inconsistency in tenderness affects consumers willingness to pay (WTP) for beef. We find that both the level and the spread of tenderness affect consumers WTP for beef. Categorization the beef into various classes of tenderness increased the total value of the beef by 8%, which suggests that improved tenderness labeling may be a profitable strategy.beef tenderness, consumer demand, experimental auction, marketing, risk aversion, Consumer/Household Economics, C91, D12, D8, Q13,

Unstable Individual Bids and Stable Market Demand

We explore preference stability at the individual and market level. We examine individual bidding behavior among 116 French consumers who participated in experimental auctions conducted seven months apart for five types of fish. We reject preference stability at the individual level, but not at the aggregate market level.aggregation, consumer preferences, demand, experimental auctions, food choice, Marketing, C91, D12, Q13,