Test‐Retesting in Experimental Valuation of Perishable Food Products: Unstable Individual Bids and Reliable Market Demand

One important property of a preference measure is its reliability. In this article, we explore the reliability of experimental auctions in measuring the market demand for five types of fish. We use the test‐retest method to compare demand curves from two Becker–DeGroot–Marschak experiments with the...

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Bibliographic Details
Published in:Journal of agricultural economics 2018-06, Vol.69 (2), p.382-392
Main Authors: Alfnes, Frode, Rickertsen, Kyrre, Shogren, Jason F.
Format: Article
Language:English
Subjects:
Aggregation
Auctioning
Auctions
BDM mechanism
Demand
Demand curves
Fish
Food production
Individual differences
Perishable foods
Property
Reliability
Test procedures
test‐retest
Valuation
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Summary:One important property of a preference measure is its reliability. In this article, we explore the reliability of experimental auctions in measuring the market demand for five types of fish. We use the test‐retest method to compare demand curves from two Becker–DeGroot–Marschak experiments with the same 116 participants conducted 7 months apart in time. The individual bids are not stable for these perishable products, but the distributions of the individual bids are stable. We find that the unsystematic individual variations cancel out in the aggregation of bids in a typical sample size for experimental valuation studies. Our results suggest that experimental auctions provide reliable market demand estimates even though the individual bids may change substantially over time.
ISSN:0021-857X
1477-9552
DOI:10.1111/1477-9552.12248