usefulness of experimental auctions in determining consumers' willingness-to-pay for quality-differentiated products

The validity and effectiveness of using experimental auctions to elicit consumers' willingness-to-pay for closely related, quality-differentiated products is examined. The effect of panelists' demographics on bid values and auction winners, and the impact of experimental procedures on auct...

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Bibliographic Details
Published in:Applied economic perspectives and policy 2004-06, Vol.26 (2), p.170-185
Main Authors: Umberger, Wendy J., Feuz, Dillon M.
Format: Article
Language:English
Subjects:
Applied Analyses
Auction markets
Auctions
Beef
bidding behavior
consumer attitudes
Consumer behavior
Consumer research
Consumer tastes
D120
D440
demography
Design of experiments
experimental auctions
food marketing
food prices
food quality
Market demand
Market prices
Meats
new products
Product quality
Q110
regression analysis
Steak
steaks
Willingness to pay
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Summary:The validity and effectiveness of using experimental auctions to elicit consumers' willingness-to-pay for closely related, quality-differentiated products is examined. The effect of panelists' demographics on bid values and auction winners, and the impact of experimental procedures on auction prices are analyzed. Demographic variables are poor predictors of bids and auction winners. Experimental procedures such as panel size and initial endowment influence market price level. Relative bid differences for paired samples are primarily influenced by relative differences in taste panel ratings. Relative willingness-to-pay values elicited through experimental auctions appear valid, while actual willingness-to-pay values are influenced by experimental design.
ISSN:1058-7195
2040-5790
1467-9353
2040-5804
DOI:10.1111/j.1467-9353.2004.00169.x