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

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.

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Journal Article
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Agricultural and Resource Economics Review, Volume 39, Number 2
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 Record created 2017-04-01, last modified 2018-01-22

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