Hostname: page-component-586b7cd67f-2brh9 Total loading time: 0 Render date: 2024-11-27T19:57:57.692Z Has data issue: false hasContentIssue false
  • English
  • Français

Using Experimental Auctions for Marketing Applications: A Discussion

Published online by Cambridge University Press:  28 April 2015

Jayson L. Lusk
Jayson L. Lusk*
Affiliation:
Department of Agricultural Economics, Purdue University, West Lafayette, IN
Get access Rights & Permissions [Opens in a new window]

Abstract

The present article discusses general issues associated with experimental auctions and their relative advantages and disadvantages over other marketing research techniques. Experimental auctions create an active market environment with feedback where subjects exchange real goods and real money, which is not generally the case with other methods. The article also discusses four experimental design issues associated with experimental auctions: auction mechanism, market feedback and bidder affiliation, demand reduction and wealth effects, and multiple attribute valuation. Each of these experimental design issues, if not properly controlled, have the potential to create serious flaws in marketing recommendations.

Keywords

auctionsexperimental economicsmarketingvaluationwillingness-to-payD44C92Q13M31
Type
Invited Paper Sessions
Information
Journal of Agricultural and Applied Economics , Volume 35 , Issue 2 , August 2003 , pp. 349 - 360
Copyright
Copyright © Southern Agricultural Economics Association 2003

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

Balistreri, E.C., McClelland, G., Poe, G., and Schulze, W.. “Can Hypothetical Questions Reveal True Values? A Laboratory Comparison of Dichotomous Choice and Open-Ended Contingent Values with Auction Values.” Environmental and Resource Economics 18(2001):275–92.CrossRefGoogle Scholar
Becker, G.M., DeGroot, M.H., and Marschak, J.. “Measuring Utility by a Single-Response Sequential Method.” Behavioural Science 9(1964):226–32.CrossRefGoogle ScholarPubMed
Buhr, B.L., Hayes, D.J., Shogren, J.F., and Kliebenstein, J.B.. “Valuing Ambiguity: The Case of Genetically Engineered Growth Enhancers.” Journal of Agricultural and Resource Econonomics 18(1993):175.Google Scholar
Buzby, J.C., Fox, J.A., Ready, R.C., and Crutchfield, S.R.. “Measuring Consumer Benefits of Food Safety Risk Reductions.” Journal of Agricultural and Applied Economics 10(1998):69–82.CrossRefGoogle Scholar
Cherry, T., Crocker, T., and Shogren, J.. “Rationality Spillovers.” Journal of Environmental Economics and Management 45(2003):63–84.CrossRefGoogle Scholar
Coppinger, V.M., Smith, V.L., and Titus, J.A.. “Incentives and Behavior in English, Dutch, and Sealed-Bid Auctions.” Economic Inquiry 43(1980): 1–22.CrossRefGoogle Scholar
Cummings, R.G., Harrison, G.W., and Rut, E.E.-ström. “Homegrown Values and Hypothetical Surveys: Is the Dichotomous Choice Approach Incentive-Compatible?” American Economic Review 85(1995):260–66.Google Scholar
DeShazo, J.R., and Fermo, G.. “Designing Choice Sets for Stated Preference Methods: The Effects of Complexity on Choice Consistency.” Journal of Environmental Economics and Management 44(2002): 123–143.CrossRefGoogle Scholar
Dickinson, D.L., and Bailey, D.. “Meat Traceability: Are U.S. Consumers Willing To Pay for It?” Journal of Agricultural and Resource Economics 27(2002):348–64.Google Scholar
Fox, J.A. “Determinants of Consumer Acceptability of Bovine Somatotropin.” Review of Agricultural Economics 17(1995):51–62.CrossRefGoogle Scholar
Fox, J.A., Shogren, J.F., Hayes, D.J., and Kliebenstein, J.B.. “CVM-X: Calibrating Contingent Values with Experimental Auction Markets.” American Journal of Agricultural Economics 80(1998):455–65.CrossRefGoogle Scholar
Frykblom, P., and Shogren, J.F.. “An Experimental Testing of Anchoring Effects in Discrete Choice Questions.” Environmental and Resource Economics 16(2000):329–41.CrossRefGoogle Scholar
Hayes, D.J., Shogren, J.F., Shin, S.U., and Kliebenstein, J.B.. “Valuing Food Safety in Experimental Auction Markets.” American Journal of Agricultural Economics 77(1995):40–53.CrossRefGoogle Scholar
Harrison, G.W., Harstad, R.M., and Rutström, E.. “Experimental Methods and Elicitation of Values.” Working paper, University of South Carolina, Department of Economics, 2002.Google Scholar
Hoffman, E., Menkhaus, D., Chakravarit, D., Field, R., and Whipple, G.. “Using Laboratory Experimental Auctions in Marketing Research: A Case Study of New Packaging for Fresh Beef.” Marketing Science 12(1993):318–38.CrossRefGoogle Scholar
Kagel, J.H., Harstad, R.M., and Levin, D.. “Information Impact and Allocation Rules in Auctions with Affiliated Private Values: A Laboratory Study.” Econometrica 55(1987):1275–1304.CrossRefGoogle Scholar
Lancaster, K. “A New Approach to Consumer Theory.” Journal of Political Economy 74(1966): 132–57.CrossRefGoogle Scholar
List, J.A., and Lucking-Reiley, D.. “Demand Reduction in Multiunit Auctions: Evidence from a Sportscard Field Experiment.” American Economic Review 90(2000):961–72.CrossRefGoogle Scholar
List, J.A., and Shogren, J.F.. “Calibration of the Difference Between Actual and Hypothetical Valuations in a Field Experiment.” Journal of Economic Behavior and Organization 37(1998): 193–205.CrossRefGoogle Scholar
List, J.A., and Shogren, J.F.. “Price Information and Bidding Behavior in Repeated Second-Price Auctions.” American Journal of Agricultural Economics 81(1999):942–49.CrossRefGoogle Scholar
Louviere, J.J., Hensher, D.A., and Swait, J.D.. Stated Choice Methods: Analysis and Application. Cambridge: Cambridge University Press, 2000.CrossRefGoogle Scholar
Lusk, J.L. “Effect of Cheap Talk on Consumer Willingness-to-Pay for Golden Rice.” American Journal of Agricultural Economics, in press.Google Scholar
Lusk, J.L., Daniel, M.S., Lusk, C.L., and Mark, D.R.. “Alternative Calibration and Auction Institutions for Predicting Consumer Willingness to Pay for Non-Genetically Modified Corn Chips.” Journal of Agricultural and Resource Economics 26(2001a):40–57.Google Scholar
Lusk, J.L., Feldkamp, T., and Schroeder, T.C.. “Experimental Auction Procedure: Impact of Valuation of Quality Differentiated Goods.” Working paper, Department of Agricultural Economics, Purdue University, 2002.Google Scholar
Lusk, J.L., and Fox, J.A.. “Value Elicitation in Laboratory and Retail Environments.” Economics Letters 79(2003):27–34.CrossRefGoogle Scholar
Lusk, J.L., Fox, J.A., Schroeder, T.C., Minteti, J., and Koohmaraie, M.. “In-Store Valuation of Steak Tenderness.” American Journal of Agricultural Economics 83(2001b):539–50.CrossRefGoogle Scholar
Lusk, J.L., House, L.O., Valli, C., Jaeger, S.R., Moore, M., Morrow, B., and Traill, W.B.. “Effect of Information About Benefits of Biotechnology on Consumer Acceptance of Genetically Modified Food: Evidence from Experimental Auctions in California, Florida, and Texas.” Working paper. Department of Agricultural Economics, Purdue University, 2002.Google Scholar
Lusk, J.L., and Schroeder, T.C.. “Auctions Bids and Shopping Choices: Is Consumer Behavior Consistent?” Working paper, Department of Agricultural Economics, Purdue University, 2002.Google Scholar
Melton, B.E., Huffman, W.E., Shogren, J.F., and Fox, J.A.. “Consumer Preferences for Fresh Food Items with Multiple Quality Attributes: Evidence from an Experimental Auction of Pork Chops.” American Journal of Agricultural Economics 78(1996):916–23.CrossRefGoogle Scholar
Menkhaus, D.J., Borden, G.W., Whipple, G.D., Hoffman, E., and Field, R.A.. “An Empirical Application of Laboratory Experimental Auctions in Marketing Research.” Journal of Agricultural and Resource Economics 17(1992):44–55.Google Scholar
Milgrom, P.R., and Weber, R.J.. “A Theory of Auctions and Competitive Bidding.” Econometrica 50(1982):1089–1122.CrossRefGoogle Scholar
Noussair, C., Robin, S., and Ruffieux, B.. “Do Consumers Not Care about Biotech Foods or Do They Just Not Read Labels?” Economic Letters 75(2002):47–53.CrossRefGoogle Scholar
Roosen, J., Hennessy, D.A., Fox, J.A., and Schreiber, A.. “Consumers' Valuation of Insecticide Use Restrictions: An Application to Apples.” Journal of Agricultural and Resource Economics 23(1998):367–84.Google Scholar
Rutström, E.E. “Home-Grown Values and Incentive Compatible Auction Design.” International Journal of Game Theory 27(1998):427–41.Google Scholar
Shogren, J.F. “The X-Chapter. Experimental Methods and Valuation.” Handbook of Environmental Economics. Mäler, K.G. and Vincent, J., eds. North-Holland, Amsterdam, in press.Google Scholar
Shogren, J.F., Cho, S., Koo, C., List, J., Park, C., Polo, P., and Wilhelmi, R.. “Auction Mechanisms and the Measurement of WTP and WTA.” Resource and Energy Economics 23(2001b):97–109.CrossRefGoogle Scholar
Shogren, J.F., Fox, J.A., Hayes, D.J., and Klie-benstein, J.B.. “Bid Sensitivity and the Structure of the Vickrey Auction.” American Journal of Agricultural Economics 76(1994a): 1089–95.CrossRefGoogle Scholar
Shogren, J.F., List, J.A., and Hayes, D.J.. “Preference Learning in Consecutive Experimental Auctions.” American Journal of Agricultural Economics 82(2000):1016–21.CrossRefGoogle Scholar
Shogren, J.F., Margolis, M., Koo, C., and List, J.A.. “A Random «th-Price Auction.” Journal of Economic Behavior and Organization 46(2001a):409–21.CrossRefGoogle Scholar
Shogren, J.F., Shin, S.Y., Hayes, D.J., and Klie-benstein, J.B.. “Resolving Differences in Willingness to Pay and Willingness to Accept.” American Economic Review 84(1994b):255–70.Google Scholar
Swait, J. and Adamowicz, W.. “The Influence of Task Complexity on Consumer Choice: A Latent Class Model of Decision Strategy Switching.” Journal of Consumer Research 28(2001): 135–48.CrossRefGoogle Scholar
Umberger, W.J., Feuz, D.M., Calkins, C.R., and Killinger-Mann, K.. “U.S. Consumer Preference and Willingness-to-Pay for Domestic Corn-Fed Beef Versus International Grass-Fed Beef Measured Through an Experimental Auction.” Agribusiness: An International Journal 18(2002): 491–504.CrossRefGoogle Scholar
Vickrey, W. “Counterspeculation, Auctions and Competitive Sealed Tenders.” Journal of Finance 16(1961):8–37.CrossRefGoogle Scholar
Wertenbroch, K., and Skiera, B.. “Measuring Consumers' Willingness to Pay at the Point of Purchase.” Journal of Marketing Research 39(2002):228–41.CrossRefGoogle Scholar