CONSUMERS ’ WILLINGNESS TO PAY FOR THE COLOR OF SALMON: ACHOICE EXPERIMENT WITH REAL ECONOMIC INCENTIVES

Abstract

In most retail markets, sellers post the price and consumers choose which products to buy. We designed an experimental market with posted prices to investigate consumers ’ willingness to pay for the color of salmon. Salmon fillets varying in color and price were displayed in twenty choice scenarios. In each scenario, the participants chose which of two salmon fillets they wanted to buy. To induce real economic incentives, each participant drew one binding scenario; the participants then had to buy the salmon fillet they had chosen in their binding scenario. The choice data were analyzed with a mixed logit model. Key words: choice experiment, color, mixed logit, salmon, willingness to pay. During the past decade, economists have used experimental markets to investigate consumer preferences and willingness to pay (WTP) for food quality attributes. The most popular method has been the second-price sealedbid Vickrey auction (Vickrey 1961) where participants submit sealed bids for the product and the price is determined by the secondhighest bid, see, for example, Shogren et al. (1994); Alfnes and Rickertsen (2003). The Vickrey auction is an incentive-compatible method for eliciting WTP. However, it is an unfamiliar market mechanism for most consumers. Consumers are more familiar with markets where the seller posts prices and they, as consumers, have to choose which products to buy. Lusk and Schroeder (2004a) designed an experimental market with posted prices to investigate consumers ’ WTP for food quality Frode Alfnes is a postdoctoral fellow and Atle G. Guttormsen is