Hostname: page-component-cd9895bd7-lnqnp Total loading time: 0 Render date: 2024-12-27T06:22:54.510Z Has data issue: false hasContentIssue false
  • English
  • Français

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
Get access Rights & Permissions [Opens in a new window]

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 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Brookshire, D.S., and Coursey, D.L. 1987. “Measuring the Value of Public Goods: An Empirical Comparison of Elicitation Procedures.” American Economic Review 77(4): 554–566.Google Scholar
Cherry, T., Kroll, S., and Shogren, J. (eds.). 2008. Environmental Economics, Experimental Methods. London, UK: Routledge.Google Scholar
Corrigan, J., and Rousu, M. 2006. “The Effect of Initial Endowments in Experimental Auctions.” American Journal of Agricultural Economics 88(2): 448–457.Google Scholar
Cummings, R., Brookshire, D., and Schulze, W. 1986. Valuing Environmental Goods: An Assessment of the Contingent Valuation Method. Totowa, NJ: Rowman and Allanheld.Google Scholar
Dickinson, D., and Bailey, D. 2002. “Meat Traceability: Are U.S. Consumers Willing to Pay for It?” Journal of Agriculture and Resource Economics 27(2): 348–364.Google Scholar
Fox, J., Hayes, D., and Shogren, J. 2002. “Consumer Preferences for Food Irradiation: How Favorable and Unfavorable Descriptions Affect Preferences for Irradiated Pork in Experimental Auctions.” Journal of Risk and Uncertainty 24(1): 75–95.CrossRefGoogle Scholar
Hanemann, M. 1991. “Willingness to Pay and Willingness to Accept: How Much Can They Differ?” American Economic Review 81(3): 635–647.Google Scholar
Irwin, J.R., McClelland, G.H., McKee, M., Schulze, W.D., and Norden, N.E. 1998. “Payoff Dominance versus Cognitive Transparency.” Economic Inquiry 36(2): 272–285.CrossRefGoogle Scholar
Kagel, J. 1995, “Auctions: A Survey of Experimental Research.” In Kagel, J. and Roth, A., eds., Handbook of Experimental Economics. Princeton, NJ: Princeton University Press.Google Scholar
Kahneman, D., Knetsch, J.L., and Thaler, R.H. 1990. “Experimental Tests of the Endowment Effect and the Coase Theorem.” Journal of Political Economy 98(6): 1325–1348.CrossRefGoogle Scholar
Knetsch, J.L., Tang, F., and Thaler, R.H. 2001. “The Endowment Effect and Repeated Market Trials: Is the Vickrey Auction Demand Revealing?” Experimental Economics 4(3): 257–269.Google Scholar
Lusk, J., and Hudson, D. 2004. “Effect of Monitor-Subject Cheap Talk on Ultimatum Game Offers.” Journal of Economic Behavior and Organization 54(3): 439–443.Google Scholar
Lusk, J., and Shogren, J. 2007. Experimental Auctions. Cambridge, UK: Cambridge University Press.Google Scholar
Noussair, C., Robin, S., and Ruffieux, B. 2004. “Revealing Consumers’ Willingness-to-Pay: A Comparison of the BDM Mechanism and the Vickrey Auction.” Journal of Economic Psychology 25(6): 725–741.Google Scholar
Parkhurst, G.M., Shogren, J.F., and Dickinson, D.L. 2004. “Negative Values in Vickrey Auctions.” American Journal of Agricultural Economics 86(1): 222–235.Google Scholar
Plott, C.R., and Zeiler, K. 2005. “The Willingness to Pay/Willingness to Accept Gap, the ‘Endowment Effect,’ Subject Misconceptions and Experimental Procedures for Eliciting Evaluations.” American Economic Review 95(3): 530–545.Google Scholar
Sherstyuk, K. 1999. “Collusion Without Conspiracy: An Experimental Study of One-Sided Auctions.” Experimental Economics 2(1): 59–75.Google Scholar
Shogren, J.F. 1993. “Experimental Markets and Environmental Policy.” Agricultural and Resource Economics Review 22(2): 117–129.Google Scholar
Shogren, J.F., Margolis, M., Koo, C., and List, J. 2001. “A Randomnth-Price Auction.” Journal of Economic Behavior and Organization 46(4): 409–421.Google Scholar
Smith, V.L. 1976. “Experimental Economics: Induced Value Theory.” American Economic Review 66(2): 274–279.Google Scholar
Sudgen, R. 2009. “Market Simulation and the Provision of Public Goods: A Non-Paternalistic Response to Anomalies in Environmental Evaluation.” Journal of Environmental Economics and Management 57(1): 87–103.Google Scholar
Tsur, M. 2009. “The Selectivity Effect of Past Experience on Purchasing Decisions: Implications for the WTA-WTP Disparity.” Journal of Economic Psychology 29(1): 739–746.Google Scholar
Vickrey, W. 1961. “Counterspeculation, Auctions, and Competitive Sealed Tenders.” Journal of Finance 16(1): 8–37.Google Scholar
Viscusi, W.K., Magat, W., and Huber, J. 1987. “An Investigation of the Rationality of Consumer Valuations of Multiple Health Risks.” Rand Journal of Economics 18(4): 465–479.Google Scholar