Estimating the Value Consumers Derive from Product Labeling

Firms spend billions of dollars annually on new product and label designs in order to attract and retain customers. The issue of labeling is also important to government agencies and nonprofit labeling organizations. For example, the U.S. Food and Drug Administration has an organizational body in its Office of Nutritional Products that deals with issues of food and dietary supplement labeling. The U.S. Department of Agriculture’s Food Safety and Inspection Service also deals with labeling through its Labeling and Consumer Protection Staff. These government agencies spend millions of dollars trying to ensure that food labels adequately inform consumers. One issue that has not been examined is the welfare difference to consumers from alternative labeling schemes/regulations. It seems likely that different labels would differ in effectiveness at informing consumers.

Do Practice Rounds Bias Experimental Auction Results?

Consumer/Household Economics,

Posted Prices and Bid Affiliation: Evidence from Experimental Auctions

In most experimental auctions, researchers ask participants to bid on the same item in multiple potentially binding rounds, posting the price submitted by the top bidder or bidders after each of those rounds. If bids submitted in later rounds are affiliated with posted prices from earlier rounds, this practice could result in biased value estimates. In this article we discuss the results of an experiment designed explicitly to test whether posted prices affect bidding behavior. We find that for familiar items, high posted prices lead to increased bids in subsequent rounds. Our results have implications for researchers conducting experimental auctions.Experimental Auctions, Posted Prices, Affiliation

The Effect of Initial Endowments in Experimental Auctions

We report the results of an experiment designed to test whether initial endowments affect value estimates elicited from experimental auctions. Comparing bids for one unit of a good, two units of a good, and a second unit of a good when endowed with the first unit, we find that willingness to pay for the second unit of a good is, on average, as much as 75% higher when endowed with the first unit. We go on to advance two theories that could potentially reconcile our results with neoclassical consumer theory.Endowment Effect, Experimental Auctions, Reciprocity, Top-Dog Effect

Consumer Preferences for Fair Trade Foods: Implications for Trade Policy

Food Consumption/Nutrition/Food Safety, International Relations/Trade, Q18, Q51 Effects,

AJAE Appendix: Posted Prices and Bid Affiliation: Evidence from Experimental Auctions

The material contained herein is supplementary to the article named in the title and published in the American Journal of Agricultural Economics, Volume 88, Number 4, November 2006.Demand and Price Analysis,

Demand Curve Shifts in Multi-Unit Auctions: Evidence from a Laboratory Experiment

Basic economic theory predicts that a consumer's willingness to pay for a good is affected by the presence of complements and substitutes. In an auction setting, this theory implies that the presence of complements would increase bid prices for a good, while the presence of substitutes would decrease bid prices for a good. However, several experimental auction studies have sold complementary or substitutable products without regard for the effects these actions could have on bidding behavior. Using data from an experimental auction specifically designed to test the effect of complements and substitutes on bids, we used both unconditional tests and conditional tests where we derived demand flexibilities to analyze whether selling complementary and substitutable products has an effect on bids. Our results show that the availability of complementary and substitutable products affects bids in the expected directions. This finding has important implications for researchers who design experimental auctions.Research Methods/ Statistical Methods,

Testing Whether Field Auction Experiments Are Demand Revealing in Practice

Recent evidence suggests that participants\u27 misunderstanding of experimental auction mechanisms can systematically bias auction results. We present a simple technique for testing whether field auctions participants fully understand the demand-revealing nature of the auction mechanism and, by extension, whether auction bids provide an unbiased estimate of participants\u27 willingness to pay

One-instanton test of the exact prepotential for N=2 SQCD coupled to a symmetric tensor hypermultiplet

Using the ADHM instanton calculus, we evaluate the one-instanton contribution to the low-energy effective prepotential of N=2 supersymmetric SU(N) Yang-Mills theory with N_F flavors of hypermultiplets in the fundamental representation and a hypermultiplet in the symmetric rank two tensor representation. For N_F<N-2, when the theory is asymptotically free, our result is compared with the exact solution that was obtained using M-theory and we find complete agreement.Comment: 11 pages, LaTeX, no figure