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Confounded by the Field: Bidding in Food Auctions When Field Prices Are Increasing

Published online by Cambridge University Press:  15 September 2016

John C. Bernard  and
Na He
John C. Bernard
Affiliation:
Department of Food and Resource Economics at the University of Delaware in Newark, Delaware
Na He
Affiliation:
Department of Food and Resource Economics at the University of Delaware in Newark, Delaware
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Abstract

Auction experiments are commonly used to determine consumers’ willingness to pay for various food items. While their non-hypothetical nature is a positive, market substitutes create a probable confounding of bids by field prices. This study examines the influence of field prices on bids for four foods in two versions by conducting auctions before and after large price increases in 2007. Results show that bids were capped at given field prices and were significantly higher in sessions conducted after store prices increased. Percentage premiums, however, were not significantly different across sessions, suggesting that effects of field prices could be reduced. Overall, researchers must be conscious of how field prices affect bids.

Keywords

auction experimentsfield pricesorganicbidding
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 39 , Issue 2 , April 2010 , pp. 275 - 287
Copyright
Copyright © 2010 Northeastern Agricultural and Resource Economics Association 

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