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Abstract

This study explores two important issues in experimental economics: calibration and auction institution. Consumer willingness-to-pay bids for corn chips made with non-genetically modified ingredients are elicited in first- and second-price auctions. Results suggest that responses to scale-differential questions, elicited in a survey, accurately predicted consumer willingness-to-pay bids. While the second-price auction induced a greater percentage of marginal bidders to offer a positive bid compared to the first-price auction, average bid levels in the first- and second-price auctions were not statistically different from one other. In a small and unrepresentative sample, 70% of student participants were unwilling to pay to exchange a bag of chips made from genetically modified ingredients for a bag of chips made from nongenetically modified ingredients. However, 20% of respondents were willing to pay at least $0.25/oz. for the exchange.

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