Experimental economics and the environment: Eliciting values for controversial goods

Jason F. Shogren, Gregory M. Parkhurst, Darren Hudson

Research output: Contribution to journalArticle

3 Scopus citations

Abstract

We illustrate the experimental method by examining bidding behavior for controversial goods, i.e., goods in which bidders have positive and negative values. Our results suggest that bidding behavior differs across auction type. Bidders with positive induced values bid sincerely in a WTP auction. Bidders bid conservatively, however, in the WTA auction, foregoing profitable opportunities. Informing bidders of their optimal strategy serves to attenuate bidding discrepancies but does not eliminate them. Treating the WTP and WTA auctions as equivalent given positive and negative values could lead one to overstate the costs relative to the benefits of the controversial good.

Original languageEnglish
Pages (from-to)133-150
Number of pages18
JournalAgricultural and Resource Economics Review
Volume39
Issue number2
DOIs
StatePublished - Apr 2010

Keywords

  • Experiments
  • Positive and negative induced values
  • Willingness to accept
  • Willingness to pay

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