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Experimental Economics and the Environment: Eliciting Values for Controversial Goods

Published online by Cambridge University Press:  15 September 2016

Jason F. Shogren ,
Gregory M. Parkhurst  and
Darren Hudson
Jason F. Shogren
Affiliation:
Department of Economics and Finance at the University of Wyoming in Laramie, Wyoming, and a Professor II at the Norwegian University of Life Sciences in As, Norway
Gregory M. Parkhurst
Affiliation:
Department of Economics at Weber State University in Ogden, Utah, and Faculty at Western Governors University in Salt Lake City, Utah
Darren Hudson
Affiliation:
Cotton Economics Research Institute at Texas Tech University in Lubbock, Texas
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Abstract

We illustrate the experimental method by examining bidding behavior for controversial goods, i.e., goods in which bidders have positive and negative values. Our results suggest that bidding behavior differs across auction type. Bidders with positive induced values bid sincerely in a WTP auction. Bidders bid conservatively, however, in the WTA auction, foregoing profitable opportunities. Informing bidders of their optimal strategy serves to attenuate bidding discrepancies but does not eliminate them. Treating the WTP and WTA auctions as equivalent given positive and negative values could lead one to overstate the costs relative to the benefits of the controversial good.

Keywords

experimentswillingness to paywillingness to acceptpositive and negative induced values
Type
Invited Papers
Information
Agricultural and Resource Economics Review , Volume 39 , Issue 2 , April 2010 , pp. 133 - 150
Copyright
Copyright © 2010 Northeastern Agricultural and Resource Economics Association 

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