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Abstract
Experimental economics procedures such as laboratory experimental auctions are increasingly being used to measure consumers' willingness-to-pay. A sealed-bid, fourth-price Vickrey-style auction was used to measure consumers' willingness-to-pay for flavor in beef steaks. Two hundred and forty-eight consumers from Chicago and San Francisco participated in the experimental auctions. The data gathered from these experimental auctions was then used to examine individual demand or utility in an experimental, uniform-price auction; and to analyze market demand and market price in an experimental auction when supply is fixed but demand varies. The results indicated that certain demographic variables may increase the probability that a participant wins or loses an experimental auction. The market price was found to be a function of the number of participants in a panel, as well as consumers' tastes and preferences. Changes in the market price of the auctions in the study appear to be more a function of the same factors that influence demand in the marketplace, rather than a wealth effect. Consumers in this research did appear to be expressing their true value for the auction product and the auction provided a valuable measure of consumers' WTP for flavor.