Experimental auction procedure: impact on valuation of quality differentiated goods

Despite increased use of experimental auctions, a myriad of different procedures are being employed without formal consideration of how the procedures might affect results. This study investigates the effect of several procedural issues on valuation estimates from experimental auctions. Results indi...

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Bibliographic Details
Published in:American journal of agricultural economics 2004-05, Vol.86 (2), p.389-405
Main Authors: Lusk, J.L, Feldkamp, T, Schroeder, T.C
Format: Article
Language:English
Subjects:
Agricultural commodities
Agricultural economics
Auction markets
Auctions
BDM
Beef
Bidding
Bids
Cattle auctions
Competition
D440
Endowment
endowment effect
Endowments
English auction
Estimates
Experimental methods
Experimental procedures
Impact analysis
Market prices
Product differentiation
Product quality
Q130
random nth price auction
Research methodology
Steak
Valuation
Vickrey second price auction
Willingness to pay
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Summary:Despite increased use of experimental auctions, a myriad of different procedures are being employed without formal consideration of how the procedures might affect results. This study investigates the effect of several procedural issues on valuation estimates from experimental auctions. Results indicate the second price auction generates higher valuations than English, Becker-DeGroot-Marschak (BDM), and random nth price auctions, especially in latter bidding rounds, and that random nth price auction yields lower valuations than English and BDM auctions. We find that endowing subjects with a good prior to eliciting bids can have an impact on valuations, but the effect varies across auction mechanism.
ISSN:0002-9092
1467-8276
DOI:10.1111/j.0092-5853.2004.00586.x