Experimental Auctions Research Articles

Color Matters: A Study Exploring the Influence of Packaging Colors on University Students’ Perceptions and Willingness to Pay for Organic Pasta

The organic food market’s rapid expansion necessitates an understanding of factors influencing consumer behavior. This paper investigates the impact of packaging colors on perceptions and willingness to pay (WTP) for organic foods, utilizing an experimental auction among university students. Drawing on previous research, we explore how colors influence perceived healthiness, premiumness, trust, and sustainability. The results indicate nuanced responses to different colors, emphasizing the need for businesses to adopt tailored packaging strategies. White and green dominate organic food packaging, aligning with associations of freshness and health. However, the study uncovers varied consumer responses, suggesting a more intricate relationship between color, trust, premiumness, and healthiness perceptions. Demographic factors such as age, gender, income, and residence areas influence WTP for organic foods with different colors, emphasizing the importance of diverse consumer segments in marketing strategies. Trust and perceived premiumness significantly influence WTP, highlighting their pivotal role in consumer valuation. The results highlight that green packaging builds trust among non-organic buyers, while organic buyers are influenced by a broader range of colors that emphasize premiumness and healthiness. The study concludes that businesses in the organic food market should carefully consider color choices in branding and packaging to effectively communicate product qualities and align with consumer values.

Athletes preferences and willingness to pay for innovative high-protein functional foods

The growing number of athletes in the population leads to an increasing demand for high-protein functional foods to which food industries are trying to respond with new products and strategies that can meet the needs of athletes. An experimental auction was performed to elicit athletes’ willingness to pay for an innovative high-protein bread, correlating it to specific food values. For a deeper understanding of the determinants of respondents' choices for high-protein bread and preferences regarding food values, the combination of Best-Worst Scaling and Cluster Analysis was used. The Cluster Analysis identified five different groups of athletes, each characterised by specific preferences and willingness to pay. Participants with high attention for the nutritional aspect and needs related to sports activity, are willing to pay more than the other ones. The investigated issue is crucial for customizing marketing strategies and meeting the needs of different athlete segments.

Bidding behaviour in experimental auctions under risk and uncertainty

AbstractThis paper explores bidding behaviour under risk and uncertainty using the Becker-DeGroot-Marschak mechanism (BDM) and second price auction (SPA). It investigates whether values elicited via the two mechanisms are consistent and whether bidding behaviour can be influenced by differences in the number and type of sources of risk and uncertainty that people face when exposed to the two mechanisms. In our experiment, subjects are exposed to non-monetary lotteries where they bid for a high-quality seafood product, but there is a chance (known or unknown) that they receive a lower quality seafood product instead. Results indicate that bidding behaviour can be influenced by the number and type of sources of risk and uncertainty that subjects face and subjects’ bidding behaviour is only consistent with standard theories of decision making under risk and uncertainty when they bid on a risky product in the SPA. Despite this, BDM and SPA elicit equal values under risk and uncertainty in this study.

From vineyard to glass: Measuring consumers’ willingness to pay for innovative rootstock-produced wine through an experimental auction

Availability of new rootstocks in vineyards offers improved sustainability and adaptability to changing climatic conditions. However, the adoption of these innovations in the wine industry can be hindered by consumer perceptions and uncertainty about the intrinsic and extrinsic characteristics of the new rootstock-produced wines. This study aims to address these concerns by examining consumer preferences towards M4 rootstock-produced wines through a consumer test and a willingness-to-pay assessment based on a Becker-DeGroot-Marschak auction analysis. A non-hypothetical experiment design, involving 201 wine consumers from the Veneto and Friuli Venezia Giulia regions of Italy, was employed to identify differences in new patterns of wine consumption due to the information provided. Results show that consumers do not identify noticeable taste differences between wines produced with innovative and traditional rootstocks. However, when informed about the water-saving benefits, their willingness to pay for wines made with the innovative rootstock is 5% higher than for wines using traditional rootstocks. This additional willingness to pay becomes statistically insignificant after tasting the wine. The introduction of the M4 rootstock among vine growers appears to be an effective solution in meeting consumer demand for high-quality products made with environmentally-friendly methods that conserve scarce resources, such as water. The findings of this study contribute to the ongoing debate on the development of sustainable and economically viable viticultural practices that address the challenges posed by climate change.

Nudging consumers about the issue of microplastics: an experimental auction study on valuation for sustainable food packaging

Plastic, integral to food packaging since the 1950s, has become a global environmental concern due to its contribution to microplastic pollution. Microplastics harm ecosystems, impacting wildlife and human health. Amid increasing focus on sustainability, global initiatives target sustainable production and consumption, but consumers struggle to verify product claims, leading to potential greenwashing, particularly in the food industry. We conducted an experiment focusing on pasta products with varied packaging and labeling attributes. Findings suggest that consumers are willing to pay more for products with both biodegradable packaging and Product Environmental Footprint (PEF) labels, indicating heightened trust and perceived sustainability. Information about microplastics’ adverse environmental effects influenced consumer valuation, particularly among females, higher-income individuals, and those with stronger environmental concerns.

The relative importance of postharvest eating quality and sustainability attributes for apple fruit: A case study using new sensory–consumer approaches

Consumer-sensory methods based on check-all-that-apply (CATA) for texture and flavour terms and conceptual descriptors offer alternatives for characterising eating quality. In this study, ‘Red Delicious’, ‘Gala’ and ‘Scilate’ apples (Malus domestica Borkh.), which were of comparable instrumental firmness, and similar in crispness and apple flavour, evoked profoundly different consumer responses. Mean liking scores from 122 consumers were 7.1 (∼like moderately), 5.8 (∼like slightly), and 5.1 (∼neither like nor dislike) for ‘Scilate’, ‘Gala’, and ‘Red Delicious’ respectively, and cluster analysis indicated three consumer-segments: one that preferred ‘Scilate’ over the other cultivars (62 % of consumers), another that liked ‘Scilate’ and ‘Gala’ equally over ‘Red Delicious’ (26 %), and a small third segment that liked ‘Red Delicious’ and ‘Gala’ equally over ‘Scilate’ (12 %). In the associated experimental auction, consumers were provided with $US3, and the mean bids for ‘Scilate’, ‘Gala’, and ‘Red Delicious’ reflected the pattern of consumer liking at $US1.72, $US0.79, and $US0.52, respectively. Correspondence analysis plots of CATA data indicated that ‘Scilate’ was associated with sensory descriptors sweet, fruity, tropical and pear flavours and positive conceptual descriptors including exciting, complex, unique, premium, yummy, intense, and powerful. ‘Gala’ and ‘Red Delicious’ were associated with sensory descriptors including old, mealy, bland, green-grassy and sour-acidic and negative conceptual descriptors dissatisfied, inferior, boring, disappointing, and uninspiring. A best-worst scaling methodology was used to elicit consumers’ priorities regarding the aspects of apple quality and production sustainability. Despite the profound differences in eating quality uncovered in the hedonic and CATA tasks, the statement ‘tastes like the best apple eaten today’ was assessed as being only 23 % as important as the statement ‘grown in a way that is sustainable and does not harm the environment’ in consumer choices. This notable outcome was contradicted in a matching online study changing the eating quality statement ‘tastes like the best apple eaten today’ to ‘Crisp, juicy and sweet’ (the attributes most frequently identified in the sensory CATA). This suggests that trade-offs between eating quality and sustainability are subject to context effects associated with whether taste is an experienced or imagined factor. There is an urgent need to better understand how consumers’ needs for sustainability in the food production system might alter what is acceptable in terms of eating quality.

A European Quality Term for Mountain Wines? An Online Experimental Auction with Italian Consumers

A European Quality Term for Mountain Wines? An Online Experimental Auction with Italian Consumers

Increased farmer willingness to pay for quality cassava (Manihot esculenta Crantz) planting materials: evidence from experimental auctions in Cambodia and Lao PDR

AbstractVarietal turnover is a major mechanism for farmer adaptation to rapidly changing environmental and market conditions. Understanding factors related to varietal turnover is critical for safeguarding food security in the face of increasingly rapid changes to production contexts. Preference elicitation methods like experimental auctions reveal farmers’ willingness to pay (WTP) for seeds with different characteristics. We engaged farmers growing cassava (Manihot esculenta Crantz) across a wide geographic scope in Cambodia (n = 321, 4 provinces) and Lao PDR (n = 391, 5 provinces) in modified second-price experimental auctions to determine WTP for three cassava seed classes: farmer-produced planting stems of an undescribed variety, farmer-produced planting stems of an elite variety with lower susceptibility to Cassava Mosaic Disease (CMD), and virus-free tested planting stems of the same elite variety. In Lao PDR, mean auction bids for a bundle of 20 planting stems were 0.54, 0.92, and 1.40 USD for farmer, elite, and elite tested stems, while in Cambodia the analogous mean bids were 0.58, 0.77, and 1.16 USD, respectively. A significantly higher WTP associated with elite variety and tested stems in both countries was influenced by both geographic location (province) and individual socioeconomic farmer characteristics. In Lao PDR this included lower WTP of women, higher WTP of ethnic minorities, and, for improved stems, lower WTP of farmers with increased cassava growing experience. In Cambodia fewer socioeconomic variables affected WTP. Our results indicate significant increases in WTP for clean planting materials and new varieties, supporting market-based clean seed approaches as a component of regional control strategies for the CMD epidemic currently threatening a global agri-food value chain.

Between Professionalism and Amateurism in the Use of the Agricultural Training Videos: Lessons Learnt from Experimental Auctions in Benin

Agriculture training videos (ATV) facilitate the wider dissemination of agricultural technologies and encourage farmers to adapt the learnings to their conditions. However, producing quality video is expensive as well as challenging for notable number of agricultural extension organizations across many Africa countries. This paper compares farmers' willingness to pay (WTP) for two distinct video quality levels—a cheap, amateurish video and a costly, professionally produced video. Using stratified random sampling, 91 farmers were selected for the experimental auction sessions. These farmers were chosen from a database that was compiled by the Ministry of Agriculture developed in 2021, with a total population of 382 vegetable farmers. Data were analyzed using Student's t-test and Tobit model. 97% of farmers who attend the experimental auction sessions, agreed to pay for the ATV and results show a significant difference of 0.063 USD between the two videos, and in favor of professional video. Farmers’ WTP for ATV is influenced by education, access to funding, images clarity, type of character in videos, understanding level of message and language spoken. Video quality is very important in the learning process in rural areas and support the promotion of professional videos. However, amateur videos can be used in agricultural training if financial support are not available for professional videos production.

Food Miles and Regional Logos: Investigating Consumer Preferences in the Midwestern United States

Regional food marketing initiatives in the United States include state-sponsored marketing programs, promotional efforts made by non-profit organizations, and retail-level supermarket campaigns. Some employ food miles, while others emphasize state boundaries or regions. Given that U.S. consumers are faced with these options, the objectives of this study are to (1) determine whether consumers have a clear preference ranking between three regional marketing logos currently seen in the marketplace, (2) estimate whether consumers are willing to pay a price premium for food mileage information, and if so, what mileage cutoffs are preferred, and (3) uncover whether displaying food mileage, regional marketing logos, or dual-displaying both sets of information is most preferred by consumers. To address these objectives, an artefactual field experiment featuring a series of non-hypothetical, random nth-priced auctions is conducted with 98 community participants in Wisconsin. The experimental auctions feature cheese displaying a regional marketing logo, a food mileage cutoff, or both simultaneously. A random-effects two-limit tobit model is used to fit the elicited bid data. Our results suggest regional logos referencing smaller geographic areas are preferred over state logos by U.S. consumers who are willing to pay a price premium. Consumers are not willing to pay a price premium for food mileage information unless it is within 50 miles. Our results also suggest larger distances do not meet consumers’ definition of local. Therefore, to appeal to consumers, federal and state agencies, retailers, and producers should consider marketing efforts targeting smaller regional areas. Such efforts could help shorten the food supply chain while providing consumers with an opportunity to make more sustainable food choices.

Purchasing habits, age effects and Chinese consumers' willingness to pay for chilled pork: Evidence from a random Nth‐price auction experiment

AbstractAs concerns over African swine fever (ASF) in China continue, measures have been taken to regulate the inter‐provincial transport of live hogs, yet entrenched non‐chilled fresh pork consumption habits make it challenging to expand the chilled pork in the market. To address this issue, our study employed multiple rounds of random Nth‐price auction experiments to measure participants' quality perceptions of, and willingness to pay (WTP) for chilled pork under different packaging, storage temperature and duration labels. By comparing the results with physicochemical lab testing outcomes, we confirmed the existence of a quality perception bias among the participants. Notably, consumers who regularly consume chilled meat demonstrated a higher average WTP, while consumers born in the 1980s exhibited significantly higher bids. Furthermore, access to emerging purchase channels positively influences consumer WTP for chilled meat, particularly through branded product purchasing experiences. Consequently, it is recommended that the public sector takes steps to balance the distribution of pork production capacity and supports the development of cold chain transportation technology to meet the growing demand for high‐quality chilled pork, especially from younger consumers.

Sensory Perception and Willingness to Pay for a Local Ancient Pear Variety: Evidence from In-Store Experiments in Italy.

Product optimisation is one of the most crucial phases in the new product development or launch process. This work proposes applying penalty analysis to investigate the impact of not just-about-right (JAR) sensorial aspects on willingness to pay (WTP) and an overall liking for a local Italian ancient pear variety and to verify the mediating role of pleasantness in the relationship between not-JAR sensory attributes and consumers' WTP using structural equation model (SEM). One hundred and twelve non-expert participants recruited during an in-store experiment evaluated overall liking and JAR attributes and were involved in an in-field experimental auction based on the non-hypothetical Becker-DeGroot-Marshak (BDM) mechanism. The participants' average WTP for the sample was EUR 3.18 per kilogramme. Only juiciness and sourness significantly impact consumers' overall liking but not on consumers' WTP. Moreover, pleasantness did not mediate the relationship between non-balanced sensorial aspects and WTP. In conclusion, the penalty analysis for attributes not being JAR in monetary and hedonic terms is a beneficial research approach for a deep-inside evaluation of the potentiality of the product in the marketplace, providing helpful directions for product optimisation. Results show market potential for the local ancient pear variety 'Angelica'.

Estimating seed demand in the presence of market frictions: Evidence from an auction experiment in Nigeria

This paper measures the effect of seed quality misperceptions on bidding behavior and demand for high-quality seed using an information-provision experiment within an incentive-compatible Vickery Second Price (SPA) auction mechanism that mimics seed purchasing decisions in the presence of seed market frictions. We find that most individuals are prone to quality misperception and revise their bids upwards (downwards) in response to positive (negative) quality signals. In addition, by exploiting random variation in the timing of cash grants, we show that imperfect information influences farmer seed valuation, even in the presence of potentially binding liquidity constraints. We also demonstrate that the provision of quality information does not fully resolve quality misperceptions. We then show that unresolved or persistent misperception is severe enough to distort bidding behavior, and ignoring it could lead to biased willingness-to-pay estimates. Our findings have important implications both for improving inference related to the identification and estimation of willingness to pay for quality seed in the presence of market frictions, and for the design of seed sector polices in developing countries.

Exploring the effects of misinformation and refutations on product valuation

Abstract Misinformation can have a significant impact on consumers’ willingness to pay (WTP) for foods. This study conducted in Italy aims to investigate the effects of misinformation and two types of refutation (tentative and enhanced) on consumers’ WTP using a non-hypothetical experimental auction for ‘blood orange’ [known as Arancia Rossa di Sicilia PGI (Protected Geographical Indication)]. Our findings represent an interesting novelty compared to the past studies since we used for the first time a non-hypothetical approach to reveal difference in WTP values. We found that misinformation significantly affects WTP, but only enhanced refutation was found to be effective in countering this effect.

Show and tell: farmer field days and learning about inputs with heterogeneous yield effects

Abstract Organic inputs can be effective in reversing soil degradation and improving crop yields, but are often underused in a developing country context. This study seeks to determine whether farmer field days (FFDs) are effective in disseminating information about novel organic inputs, and the extent to which they increase demand for these products. Using experimental auctions to measure willingness to pay (WTP) among smallholder farmers in Western Kenya, we find that those farmers exposed to information from FFDs related to biochar and vermicompost, novel organic inputs, have lower WTP for the products. We present evidence that this is likely driven by two factors in particular: changes in perceptions of input profitability and heterogeneity in yields across demonstration plots within field day sites.

Eliciting vulnerable consumers’ preferences for redundant vs. organic and functional claims: Experimental auction studies among young and older adults

The growing use of redundant claims on food products pose a risk for organic and functional food producers among others, as it can mislead consumers in their products’ evaluations. Redundant claims refer to marketing statements that highlight qualities or attributes that are expected or should be inherent to the product. Previous studies reveal that consumers are generally willing to pay more for redundantly claimed products. In this study, preferences are analyzed for organic, functional, and redundantly labeled apple juice among specific consumer groups, namely young and old adults. To elicit individual monetary preferences a lab experiment and a field study were conducted with 147 younger (average age: 21 years) and 131 older participants (average age: 70 years), in both studies an incentive compatible technique was applied. Results showed that either younger and older consumers are willing to pay higher prices for organic, functional, and redundantly claimed apple juices. Perceived healthiness was a significant factor in increasing preferences for all the added valued products in the case of younger participants, but health only influenced preferences of organic and functional apple juice among older participants. Preferences of redundantly claimed and organic products were similar in the case of young participants, as functional and redundantly claimed juices preferences in the case of older participants.

An experimental study of auctioneers’ and bidders’ preferences over corruption in auctions

This paper examines the role of auctioneers’ payoff structure in determining (a) their willingness to solicit bribes in exchange for an auctioned item, (b) their preference over soliciting a bribe from an auction’s highest- or lowest-bidder, and (c) the likelihood an auction is won by its highest-bidder. I conduct an auction experiment with bribery in which auctioneers’ net-of-bribes payoffs are not fixed, but depend on the size of the winning bid. Bribery reduces the probability of victory of highest-bidders and average winning bids. When auctioneers’ payoffs are highly dependent on winning bids they are less likely to solicit a bribe and more likely to choose the highest-bidder when soliciting one. These results indicate that aligning auctioneers’ personal profit-maximization objectives with the desired outcome of the auction mechanism reduces the likelihood and negative effects of bribery in auctions.

Consumers’ willingness to pay for local rice: Empirical evidence from Central Java, Indonesia

This study examines Indonesian consumers’ willingness to pay for local rice products as against commercial imports. We aimed to determine the consumer preference factors for local rice through a questionnaire survey and experimental auction in Surakarta and Sleman, two areas in the top rice-producing region of Central Java. The bidding price results of the three rounds of auction to determine the increasing nominal price for the local rice type, after information and tasting sessions, show the participants, as major rice consumers, confirming the highest interest in local rice, while displaying relatively less knowledge of the different rice varieties available in the markets. Most consumers evaluated both cooked and uncooked rice based on swelling and variety. The findings suggest the need to pay greater policy attention to local rice production and varieties, based on the preferences and attributes of the consumers.

Can Marketing Increase Willingness to Pay for Welfare-Enhanced Chicken Meat? Evidence from Experimental Auctions.

Consumer concern for animal welfare is currently not fully reflected in the market share of welfare-enhanced meat. A possible solution is developing marketing strategies that emphasize personally relevant benefits such as taste and curiosity, instead of having a sole focus on sustainability-related benefits, since existing research indicates that the former are more appealing to most consumers. This study tests strategies positioning welfare-enhanced meat as personally relevant in a real-life experiment and how consumer attitudes towards eating meat influence reactions to the positioning strategies. The study conducts experimental auctions with 101 Dutch university students, manipulating the positioning strategy and a certified animal welfare label and measuring participants' willingness to pay (WTP) for a lunch meal with chicken meat. Results indicate that all manipulations significantly increase consumer WTP, with higher WTP for certified labels than for the positioning strategy, and the highest WTP for the combination of both elements (without providing evidence for an interaction effect). This implies that companies should combine positioning strategies that emphasize personally relevant benefits with certified labels. Since the effectiveness of such strategies may be limited for consumers with conflicting feelings towards meat, some care should be taken when designing awareness campaigns about the effects of meat consumption.

Information and the trade-off between food safety and food security in rural markets: Experimental evidence from Malawi

We implemented a clustered randomized control trial with experimental auctions among 1,098 rural households in Malawi to evaluate whether providing training about food safety increased demand for safe groundnut. We measured the impact of training on demand for observable and unobservable dimensions of quality, at harvest and in the lean season. We found that the control group who was not trained valued sorted grains (an indicator of observable quality) only. At harvest, both trained and untrained consumers placed statistically equal premiums on food safety labeling (an indicator of otherwise-unobservable quality). However, in the lean season, untrained consumers’ premiums for food safety labeling disappeared, while trained consumers’ premiums for food safety labeling increased.